The UK-listed investment management firm Henderson announced today it was proposing to buy embattled rival Gartmore Group in a deal that would create a firm with combined assets under management of £78 billion (around $121.9 billion).
The UK-listed investment management firm Henderson announced today it proposes to buy embattled rival Gartmore Group in a deal that would create a firm with combined assets under management of £78 billion (around $121.9 billion).
Under the terms of the deal, Gartmore shareholders will receive two Henderson shares for every three Gartmore shares.
“The boards of both Gartmore and Henderson intend to recommend unanimously to shareholders that the offer be accepted,” according to a statement from Henderson. The acquisition is expected to be completed in the next three months, subject to regulatory and shareholder approval.
Executives involved in the deal were due to explain their strategy at the time this publication went to press. One of the issues expected to be addressed was the issue of how or whether the Gartmore brand name would be used.
If the deal goes ahead, it will mark another step in the consolidation of the UK asset management industry, which has seen Henderson emerge as one of its leading players. At the end of last year, Henderson had £61.6 billion of assets under management, itself a consequence, in part, of its purchase of New Star Asset Management in January 2009. New Star was another listed UK firm to be hit by adverse events.
Gartmore, which is one of the most recognisable fund brands in the UK, saw its fortunes plummet late last year after one of its star managers, Roger Guy, quit the firm. The company’s shares fell sharply. Gartmore was listed as recently as 2009, having previously been a privately held business.
Henderson has already taken on a number of Gartmore managers who together represent 84 per cent of Gartmore’s AuM, the Henderson statement said.
They include Charlie Awdry – emerging markets, John Bennett – European equities, Chris Burvill – cautious managed, Rob Giles – UK small cap, Tony Lanning – multi-manager, Adam McConkey – UK small cap, Luke Newman – UK long/short equities, Chris Palmer – emerging markets, Simon Peters – long/short financials, Neil Rogan – global equities, John Stewart – Japan long/short equities and Ben Wallace – UK long/short equities.
“Gartmore has a highly complementary strategy and stable of products to that of Henderson. 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. By bringing across fund managers and integrating the business onto our own platform we will be able to enhance margins significantly,” said Andrew Formica, chief executive of Henderson.
Gartmore had an estimated AuM of £16.5 billion as at the same date with associated estimated run-rate net revenue of approximately £163 million per annum, of which £120 million relates to run-rate net management fee revenue and £43 million relates to run-rate gross performance fee and transaction fee revenue.