Terry Smith prepares fund manager launch

Terry Smith, the City of London veteran, is planning to launch a fund management company and is likely to step down from financial services group Collins Stewart before the new venture starts.

He is seeking approval from the Financial Services Authority for the company that will ce called Fundsmith. Mr Smith is chief executive of interdealer broker Tullett Prebon as well as deputy chairman of Collins Stewart. Insiders said the funds will be open to retail and institutional investors, and Mr Smith is understood to be investing a sizeable sum of his own.

It is expected to start accepting investments before the end of this year. It is understood that Mr Smith will have stepped down from his role at Collins Stewart by then.

The fund will be chaired by Keith Hamill, a former chairman of Moss Bros andcurrent chairman of Tullett, who has had a well-established business association with Mr Smith. The incorporation documents were filed with Companies House in April.

Mr Smith is one of the City's more colourful characters, who is not shy to air his opinions on his "Straight Talking" blog. He has worked in finance for 35 years starting his career at Barclays. He came to prominence after writing a book called Accounting for Growth while at UBS, which sold more than 100,000 copies but also cost him his job.

He joined Collins Stewart in 1992, and was appointed chief executive in 2000. In 2003, it bought Tullett Liberty, before demerging the groups in 2006. Tullett was the focus of takeover interest earlier this year, although talks collapsed in May. The company revealed last month that it was still open to the possibility of a takeover.

It also announced that pre-tax profits had fallen from £91.7m in the first half of 2009 to £79.3m a year later. While the results beat analysts' expectations, Mr Smith said Tullett's profits had been hit by defections of brokers in its North American operations to its rival, BGC Partners, as well as adverse currency movements.