Gartmore sets hare running on flotation boom with £1bn listing

Fund manager's listing to give executives a windfall
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Gartmore yesterday raised hopes of a new year flotation boom, as the fund manager said it planned to list its shares on the London Stock Exchange next month.

The company, set to be valued at £1bn or more, is expected to raise £250m of new money with the aim of cutting net debt of £400m to £150m. However, the flotation will be larger because management – who own 43 per cent of the company – will be able to sell down up to 20 per cent of their holdings, while its US private equity backer is also expected to cash in. That is likely to mean substantial windfalls for a number of Gartmore's top people.

Jeff Meyer, chief executive, said: "The market has been recovering. We had been talking to our bankers and there are a lot of companies likely to come to the market next year. We didn't want to get caught in the queue so we thought we would open up the gateway.

"We have had some very encouraging views on the state of the markets and we want to get our borrowing down so we thought we would beat the rush. I'm tremendously excited about this step. It will give us equity capital to look at acquisitions and will mean our people can put a value on their holdings."

Gartmore is one of Britain's best-known fund managers, and at the end of September had £22bn of assets under management. In the first nine months of the year, the company made operating profits of £38m on revenues of £207m.

Its move on to the market is set to come ahead of a flurry of major share issues. Retailers New Look and Pets at Home are expected to follow early next year, while the discounter Poundland is also considering a stock market listing.

Other private equity-owned companies considering a similar move are thought to include Merlin Entertainments, which runs the London Eye, Madame Tussauds and Legoland, and Saga, the travel and financial services group.

It comes after a period when flotations in London have all but dried up as a result of the financial crisis and recession. This year has seen just five companies joining the main market, compared to 33 in 2008.

A London Stock Exchange spokesman said: "We do have a very strong pipeline of new listings. What we are telling companies is that they should get themselves ready so they are in a position to move when the time is right."

Gartmore itself had been lining up a £1.5bn float in 2007 but the decision was taken to pull it as markets deteriorated. The company is hoping for a free float of between 30 to 50 per cent after the planned listing, which is slated for 11 December.

H&F's stake will fall below its majority position from about 52 per cent although it is set to keep its representation of two directors on the Gartmore board. With pre-marketing underway, the price is likely to be set towards the end of the month.