Anglo-Australian funds house Henderson is buying troubled British rival Gartmore, to create one of Britain’s largest retail asset managers with £78bn ($122bn) under management.
“By bringing across fund managers and integrating the (Gartmore) business onto our own platform we will be able to enhance margins significantly,” Henderson chief executive Andrew Formica said.
“Its recent travails should not overshadow the fact that Gartmore is one of the best known managers in UK fund management and its assets are performing well,” he said.
Gartmore, which listed at 220 pence per share in December 2009, suffered a litany of woes in its year as a public company, including the departure of star manager Guillaume Rambourg following a regulatory probe and the retirement of so-called “key man” Roger Guy in November.
Both exits spooked clients and sparked heavy outflows of assets. The Henderson deal will crystallise a 58 percent loss for investors who bought shares when Gartmore floated.
Staying on board
Henderson said Gartmore fund managers with collective responsibility for 84 percent of Gartmore’s assets under management had endorsed the deal, easing fears many could walk out under new management.
John Bennett, Gartmore’s star European equities manager, is among those who have committed to stay.
However, the marriage of the two companies may lead to departures. “Clearly there are overlaps and it is likely people will be affected. But it is too early to comment on the details,” a Henderson spokesman told Reuters.
Cannacord analysts said the transaction comfortably offered at least 10 percent earnings enhancement in Henderson’s 2011 fiscal year on an annualised basis.
Gartmore shareholders will hold around 22.5 percent of the enlarged group. Henderson has received irrevocable undertakings to support the bid representing 60 percent of Gartmore’s shares.
Institutional shareholders in Gartmore had advocated a quick sale, following the departure of fund manager Roger Guy, responsible for about 17 percent of its assets.