TSB sells Target trusts to EFM
Saturday 09 January 1993
The agreed payment for the funds is 2.25 per cent of the total funds under management, about pounds 110m, Edinburgh Fund Managers said. The sale is expected to be completed on 31 March.
EFM, with pounds 2bn under management, has a respectable track record, while Target's fund performance over recent years has been patchy. A general UK fund, Target Equity, ranked 68th out of 75 funds over five years.
Mr Iain Watt, EFM's managing director, said EFM wanted to grow and Target offered several funds that EFM did not. 'It increases our unit holders to 60,000 from 25,000. It's a logical expansion for us,' he said.
TSB acquired Target, the insurance group, in 1987 for pounds 227m just before the stock market crash. After the crash, Target's performance fell flat. From a net asset value of pounds 55m in 1989, it was making losses of pounds 27m by the first half of 1990.
The bank sold Target's sales and marketing division in 1991 to Axa Equity and Law, the life assurance company, but in a complex deal retained responsibility for Target's fund management. TSB took an pounds 80m provision against losses on Target in 1990.
TSB retains Target Life Assurance, which will liquidate its pounds 210m of investments in Target Trust and reinvest so that its funds will continue to be managed by Hill Samuel Investment, TSB's investment arm, EFM said. TSB shares fell 1 1/2 p to 156 1/2 p yesterday.
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