Fund managers consider flotation on London market

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The Independent Online

The London Stock Exchange could be poised for at least two major fund management flotations as insurers consider partial sales of their asset management arms.

Jupiter's successful listing is thought to have alerted both Standard Life and Prudential of the possible gains to be made from either floating or partially selling their fund management arms, Standard Life Investments (SLI) and M&G.

Jupiter, run by Edward Bonham Carter, has seen its shares soar to close on Friday at 253.5p, up 2.9p, after joining the market at 165p. It has proved that there is an appetite among investors for fund management groups after the troubled listing of Gartmore last year.

It is likely that both companies would retain small teams to handle their life assurance assets, or substantial stakes in their subsidiaries, if they opted to make such a move.

Standard Life executives are understood to have been touring the City in a bid to convince analysts that SLI's true worth is not reflected in the valuation of the group.

Standard closed at 229.9p, down 1.2p, on Friday but its "embedded" value, which tots up the value to the company of all the plans and policies held by customers, stands at more than 300p.

The group is already understood to have worked on plans to spin SLI off during the middle part of the decade, when regulators demanded it raise more capital resulting in the group's flotation.

Reheating the idea now would appease Keith Skeoch, the ambitious head of SLI who was passed over for the job of chief executive of Standard Life Group in favour of former finance director David Nish.

Rumours of a similar move at M&G have been gathering strength since the disastrous attempt by its partner, Prudential, to take over Asian insurer AIA.

Hostility towards chief executive Tidjane Thiam and chairman Harvey McGrath, seen as the deal's architects, led a group of small investors to chant the name of M&G boss Michael McLintock at a stormy group AGM. He is seen as a possible successor to Mr Thiam, who only narrowly survived calls for his head after the AIA debacle, which cost the company more than £300m.

A spin-off would generate capital for the group and could appease critics who have called for a break-up of the company. M&G has been used as something of the cash cow for the group.

Prudential shares closed on Friday at 636.5p, down 8.6p, having recently stated a recovery following the deal.