Schroders pays $101m for London-based hedge fund

The deal will see NewFinance's founders, Mark Hotimsky and Georges Saier, cash in more than £20m from the sale, less than four years after founding the fund of hedge funds boutique. Mr Hotimsky is a former managing director of Credit Suisse First Boston, while Mr Saier was a senior director at JP Morgan. A third partner, Thorkild Juncker, will make about £5.8m from the sale.

Schroders agreed to pay a further $41m, if certain targets are met over the next four years.

The news came as the fund manager announced a better-than-expected 18 per cent rise in annual pre-tax profits to £250.7m. Although net retail sales were flat for the year, profits from the asset management division increased by almost one-third.

And while Schroders' institutional business saw net outflows, profits still grew by 15 per cent.

In spite of its latest acquisition, the group has more than £800m of free cash to spend. Michael Dobson, the chief executive, said the company was continuing to look for ways to expand in the US market.

The group said it remained bullish about the prospects for the group in 2006, in spite of an anticipated slowdown in global equity-market growth. Mr Dobson said he expected the retail business to return to delivering positive net inflows over the year, boosted by the launch of several new products.

Shares in the company hit five-year highs of 1,193p in early trading, before closing down 24.5p at 1147.5p, giving the company a market value of £3.36bn.