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Fund companies set for consolidation

Ignis Asset Management sales and marketing director Jonathan Polin believes that a wave of consolidation will hit the asset management sector next year, with listed firms the most exposed.

Polin says numerous firms will be seen as targets in the next few months.

He says: “Market conditions dictate that we are expecting a greater degree of consolidation in the market and it is natural to expect that those with a listing are going to be the more exposed as their share price is there for all to see and can put them in the shop window more easily.

“There are bound to be firms who are struggling but are less likely to be targets, given that they have no listing.”

Polin’s comments come as takeover talks continue to intensify in the industry.

Neptune, Henderson and Aberdeen have all been mentioned as potential suitors for New Star. Aberdeen is understood to be leading the race to take on Credit Suisse’s traditional fund management business although Schroders is also thought to be interested. The share-based deal would double Aberdeen’s assets under management.

Credit Suisse put the division up for sale earlier this year after a strategic review. It has about £145bn in equity and bond funds.

Gartmore Investment Management is coming under pressure over its reported £321m debt. The firm, which recently announced potential job losses, saw Standard & Poor’s downgrade its credit rating from BB+ to BB.

Poor’s says: “Management continues to take a prudent approach but Gartmore is already a lean organisation with limited scope for further efficiencies without harming its franchise.”

Gartmore global head of distribution Phil Wagstaff says: “There is no pressure here. Our debt is covenant-light, meaning that there is no prospect of breaching and we do not have to pay anything back until 2014. We also have £160m of cash on our balance sheet and our earnings’ profit for the year is £96m.”


Road to 2012

Much of the focus following the publication of the retail distribution review feedback report has probably been in the wrong areas. Instead of looking at the positives, some commentators have going round in ever decreasing circles of ranting and unhelpful contributions. This simply moves everybody backwards or at best sideways.


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