PDFM set to be sold for pounds 1.8bn
Saturday 20 June 1998
A UBS spokeswoman confirmed that the board was reviewing the role of PDFM. She said: "We are reviewing a number of activities. PDFM is one of those. Selling is one of the options, but it is not the only one." The spokeswoman added that she expected the UBS board to come to a decision about PDFM "in July sometime".
The decision to sell PDFM is understood to be a direct consequence of the UBS/SBC merger. The two Swiss banks announced plans to merge back in December, and expect to start operating as a single bank - the "new" UBS - next month.
Reports of culture clashes between PDFM, run by maverick fund manager Tony Dye, and Brinson, SBC's Chicago-based asset management arm, prompted intense speculation about the future of PDFM.
PDFM is believed to have told UBS executives that it would rather be sold than be integrated with Brinson. UBS is now looking to sell the fund manager to a financial institution which could guarantee PDFM operational independence. A management buyout is thought unlikely.
Rumours about the identities of potential bidders were rifeyesterday. Speculation focused on the large US banks, in particular Goldman Sachs. Some analysts predicted a deal with one of the larger European banks could be on the cards.
John Leonard, banking analyst at Salomon Smith Barney, said: "ABN Amro has been interested in money managers from time to time, and Commerzbank has been looking as well. In the UK, Halifax has the money to spend as well as an interest in the area."
Sources said any deal would need to have the backing of the PDFM management.
Mr Dye, PDFM's chief investment officer declined to comment. Mr Dye achieved a degree of notoriety after PDFM took up a strong cash position at a time when stock markets were booming.
Fund managers are currently attracting heady stock market valuations, following the sale of Mercury Asset Management (MAM) to Merrill Lynch of the US for pounds 3.1bn.
One analyst, who declined to be named, said: "MAM was sold for around 3 per cent of its assets under management. If you applied a similar figure to PDFM, that gets you to pounds 1.8bn, although, to be frank, PDFM is unlikely to fetch that price. I would expect the price to be nearer to 2 per cent of assets under management [around pounds 1.2bn].
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