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Advisers share booty from New Star float

Two of the industry’s highest profile advisers who backed New Star Asset Management from launch are playing down their holdings as it floats on the Aim this week.

Hargreaves Lansdown director Peter Hargreaves has seen his 50,000 investment more than double to 120,000 in five years while Chelsea Financial Services managing director Darius McDermott has enjoyed a healthy, albeit lesser, return after buying in slightly later.

Both will be able to cash in immediately on Friday when the fund firm floats on Aim but staff will be restricted by a four-year lock-in period.

The float sees just 14.7 per cent of the business being placed at 225p a share, valuing the firm at 704m – equivalent to 4.5 per cent of its 15.2bn funds under management. This means chairman John Duffield’s stake will be worth 120m while chief executive Howard Covington and star fund manager Richard Pease will be worth around 22m each on paper.

The four-year staggered lock-in of key staff means there are restrictions on how many shares they can sell in a year until 2009.

The firm has promised to pay a dividend of at least 3p in the first year, which equates to a yield of 1.3 per cent, and says it is likely to move toward a full listing after it has built up a longer trading record.

Hargreaves says: “I paid 50,000 five years ago and the shares are now worth about 120,000. Yes, it has been a good investment but has it materially affected my wealth? I will leave it for you to surmise. It never affected my decisions whether to promote New Star, I can assure you.”

McDermott says: “I am not going to sell the shares but I must own less than 0.001 per cent of the company.”

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