MAM to buy investment trust specialist

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The Independent Online
MERCURY Asset Management, the leading pension fund manager, is set to acquire River & Mercantile Investment Management as part of a plan to build up its investment trust business.

River & Mercantile is an investment trust specialist that manages about pounds 400m. The firm is wholly owned by the pounds 200m River & Mercantile Trust, the split capital fund that founded it in 1985.

Although Mercury is one of the big four firms that dominate pension fund business, until recently it managed only one investment trust, Keystone. Last month it raised nearly pounds 426m for Mercury World Mining Trust, the largest investment trust yet launched. Mercury is also launching a fund to invest in European privatisations.

David Rosier, chairman of Mercury's private investor division, said the acquisition of River & Mercantile will give it pounds 1bn of investment trusts under management. Mercury said it had entered exclusive negotiations to finalise the deal.

Vivien Gould, a director of River & Mercantile Trust, said the deal would offer River & Mercantile the opportunity 'to join up with the leading investment management house in Europe at the beginning of its strategic move into investment trusts'. It is intended that the firm's 15 employees will join Mercury.

The deal will also achieve the trust's objective of eventually realising the value of its investment.

The firm was valued at about pounds 2m in the 1992 accounts of River & Mercantile Trust. Miss Gould said the majority of this was retained profits and did not reflect the full value of its business.

Mr Rosier said the final price would have to reflect the limited life of some of the funds managed by River & Mercantile.

He said he saw the deal as 'more of a merger than a takeover. We are very keen to take on their personnel. They have got a lot of expertise. We have had a lot of success but we can always learn.'