New Star float shoots for £400m

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The Independent Online

New Star, the fund manager founded by John Duffield, is lining up a flotation that could value the group at £400m and make many of its employees multimillionaires.

The group has been talking to investment bank HSBC Securities about a listing.The float will come at the end of a massive spending spree that has seen New Star pay almost £140m for around £4.5bn worth of funds under management in the last year. This has more than doubled the amount of business handled by the group, which is believed to now have more than £7bn of assets under its control.

New Star was founded in 2001 by Mr Duffield after he left Jupiter, the fund manager he founded and sold to Germany's Commerzbank, making £175m.

He has assembled a team of well-known fund managers - such as Tim Steer and Patrick Evershed - and City figures including former corporate financier Howard Covington and ex-Sunday Times City editor John Jay. Most senior executives have been able to buy shares in the company at a price equivalent to between £1 and £5 a share, while outside investors have had to pay significantly more.

When New Star was founded in April 2001, it raised £25m at the equivalent of £80 a share. Later that year it raised another £25m at around £150 a share. It then raised another £32m last February at around £80 a share, and is understood to have raised further funds at around £90 a share, along with around £45m of debts.

Shareholders include City institutions as well as the former Dixons chairman Sir Stanley Kalms, the financial adviser Peter Hargreaves, and the Bamford family of JCB fame.

Mr Duffield, 64, is understood to be hoping to see the group valued at £400m, the equivalent of around £170 a share. It has yet to show a profit, making losses of £7.3m in 2001 and £11.1m in 2002.