F&C launches renewed attack against activist Sherborne

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The Independent Online

F&C Asset Management renewed its attack on the American activist investors trying to oust its chairman yesterday and said a sharp rise in funds under management showed that its strategy is working.

Sherborne, which bills itself as a turnaround specialist, has called an EGM with the aim of replacing the incumbent chairman Nick Mac-Andrew with its founder Edward Bramson on February 3. It also wants to secure the election of two other directors and claims the fund management has spent too much on deals and is under valued compared to rivals.

But F&C hit back yesterday reporting that funds under management had grown to £105.8 bn at December 31, up 8 percent on the year. And while the company continued to lose client money in 2010, with total net outflows of £508m in the full year, excluding insurance clients there were net inflows of £272m. That is a turnaround after four years of losing client funds. Insurance clients still make up the majority of F&C's business but the company is seeking to shift towards higher-margin mandates.

The company accused Sherborne of having "misunderstood" the rationale for buying REIT Asset Management and Thames River Capital saying the two businesses "have enhanced the Group's product range and investment expertise and have helped strengthen the Group's management team". The fund manager said they were also executed at lower earnings multiples than other recent deals in the sector.

F&C also called on Sherborne to confirm Mr Bramson would not seek an executive role launch a rights issue. And it said: "Will Mr Bramson's executive chairmanship of Nautilus, a US- based manufacturer of gym equipment, the share price of which has fallen c.75 per cent, since Sherborne acquired its 20 per cent interest, together with his other responsibilities, allow him to carry out properly his proposed role as chairman of F&C?"

Sherborne said: "If appointed, the newly appointed directors very much look forward to working closely with the Board of F&C, the members of which Sherborne holds in high regard, to bring a fresh perspective to the company's strategic direction. As has been the case in all of Sherborne's previous investments, appropriate time would be devoted to this cause."