Edinburgh Fund Managers, which has haemorrhaged £1bn of fund management mandates in the past three months, revealed it was in takeover talks with a potential bidder.
The news sent shares in the company soaring more than 22 per cent to close at 90p. This gives it a market capitalisation of £25m and a buyer may pay up to £30m for the company.
Top of the list of candidates is Isis Asset Management, the business created when Friends Ivory & Sime bought Royal & SunAlliance's fund management arm. About 35 per cent of EFM's £3.5bn fund portfolio is in investment trusts. Isis is also a large investment trust manager and would be able to merge the EFM operations with its Edinburgh base. "Buying EFM would make perfect sense for Isis," an insider in the Edinburgh fund management community said. "They have a grounding in investment trusts and they are Edinburgh based, so they could make some money out of taking on the funds. It really is a great fit and they could get it for an astonishing steal. "
EFM's future has been hanging in the balance following a continued stretch of poor performance that led clients to take their money elsewhere. Its assets under management have halved since 2001 to £3.5bn and its share price has fallen from 278.5p this time last year.
Matters came to a head in November with a bloody boardroom battle between shareholders and directors. Pressure from shareholders forced out its chief executive, Iain Watt, and pushed four non-executive directors to resign.
Since then, Anne Richards, the chief investment officer, and Rod MacRae, the chief operating officer, have been running the company. They appointed Hawkpoint Partners in February to advise on how the company could be rescued. EFM said the board continued to "review its strategic options including discussions, which may or may not lead to an offer".
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