PDFM could be sold off by SBC

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The Independent Online
PDFM, the fund manager, could be sold off in the wake of the $33bn (pounds 20bn) merger between Swiss Bank Corporation and the Union Bank of Switzerland.

Speculation is mounting that the combined group is likely to ditch PDFM, which is currently part of UBS, in favour of Brinson, SBC's fund management arm.

PDFM has been criticised for its performance in recent years. Tony Dye, its chief investment officer, missed out on the surge in shares by moving a large chunk of PDFM's funds into cash and gilts after claming the stock market looked overvalued.

However PDFM is still one of the largest fund managers in the City and is likely to attract plenty of interest from potential suitors such as Dresdner Kleinwort Benson, the German bank, Goldman Sachs, of the US and the Dutch bank ING.

Reports suggest that SBC has already approached potential buyers for PDFM. However the merger will not be officially completed until July. and a spokeswoman for UBS said yesterday that until then the board of SBC had no authority to orchestrate a sale.

"As part of any merger all holdings will be looked at and the whole organisation will be under review," she said. "But no decision has been taken on the future of PDFM."

Analysts believe that the marriage of PDFM, which has pounds 60bn of funds under management and Chicago-based Brinson was always likely to run into complications.

It is not only distance that could stand in the way of an effective partnership of the two businesses. City observers point out that Brinson's different investment style and much better performance figures set it apart from its English rival. Listings compiled by the Combined Actuarial Performance Services showed that PDFM's key Managed Exempt Fund ranked a lowly 64th of 70 UK funds of its kind last year.

The sector is already consolidating rapidly. Last year Mercury Asset Management, the UK's largest fund manager was snapped up by Merrill Lynch, the American financial giant.

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