F&C is set to pay an initial consideration of £33.6m payable in cash and loan notes with up to a further £20m through F&C shares or loan notes should Thames River Capital meet a number of performance targets at December 31, 2011 and June 30, 2012. F&C hopes to conclude a deal for the firm by the end of the third quarter of 2010.
Thames River launched in 1998 and currently has £4.2bn of assets under management. Among the investment team is the highly regarded multi-manager duo of Gary Potter and Robert Burdett who joined the firm from Credit Suisse Asset Management in 2007. The acquisition will exclude Nevsky Capital, which will demerge from Thames River Capital prior to the completion of the deal and will be directly held by the current Thames River shareholders.
Thames River investment director Michael Warren says Potter and Burdett will run the combined retail franchise with F&C multi-manager head Dean Cheeseman running the institutional and lifestyle funds at the firm. Warren also says European teams will also be combined at the conclusion of the deal.
The acquisition will see F&C acquire an economic interest in the management and performance fee profits generated by the investment teams at Thames River, with the economic interest set to increase over time.
F&C has also agreed retention and incentive plans for Thames River Capital’s key personnel under which conditional awards will be granted over F&C shares with a value equal to £35m that will be subject, in the case of the incentive plan, to the achievement of certain financial targets and vests between 30 months and six years after completion of the acquisition.
F&C chief executive Alain Grisay says: “Having made good progress with our core business, our focus now is to increase the momentum of our sales into higher fee margin products. I am therefore delighted to announce the acquisition of Thames River Capital, which we believe will accelerate the shift to higher fee margin products and enhance our distribution capabilities.”
Thames River Capital chief executive Charlie Porter says: ‘We think that a combination of F&C and Thames River Capital will create one of the most dynamic asset management firms in London, bringing together the history, strength and reach of F&C with all of those attributes of modern asset management that are embedded in Thames River Capital.”