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City of London anticipating Gartmore MBO

The City of London is anticipating the announcement of a £450m management buyout by fund manager Gartmore.

The fund manager has been left on a limb by the continued speculation over the future of owners NatWest, which is the subject of a £22bn bid from Bank of Scotland, which led to the withdrawal of a bid by the bank for Legal &General.

L&G would have been given the responsibility for investment management within the new group.

Rumours of an MBO, which are denied by senior management, have been circulating high levels of the company for some days.

But City insiders say the move is the only answer to the firm&#39s predicament.

A source close to Gartmore says: &#34It is the only way the way it can prevent its star fund managers from leaving. They have been unsettled by everything that has gone on and would need a type of &#39Golden Hello&#39 to stay. This makes a trade sale unlikely because without them there is pretty much nothing there to buy.&#34

Analysts say the price, at just under 1 per cent of Gartmore&#39s £52bn assets under management, is low but the firm would never approach the 3 per cent price paid for Mercury Asset Management by Merrill Lynch because of poor performance.

But its European, UK Smaller Companies and Japanese funds have performed well and their key staff would be vital for the company&#39s future.

Gartmore has denied its joint chief executives Andrew Brown and David Watts have reversed a decision to depart.


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