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MBO emerging as an option for R&SAI staff

Senior managers at Royal & Sun Alliance Investments are believed to be considering a management buyout if a strategic buyer cannot be found.

The managers are believed to be concerned that many of the potential suitors for the company – thought to include Aegon, Aberdeen and Friends Ivory & Sime – may seek to strip the company of its assets and jettison high-ranking staff.

But rather than take the risks of a MBO, they are thought to prefer a buyer who would take a strategic interest, wanting to build up the business with its existing team.

Candidates on this wish-list are believed to include GE Capital, German insurer Allianz and Swiss Life, all of which do not have an asset management presence in the UK.

But such buyers have not been forthcoming, leaving the firm vulnerable to a takeover from a company more likely to consolidate the business and replace the existing management.

The company has been under review by its parent group since last year, alongside R&SA&#39s life and pension arm. A share-incentive scheme offered to managers was withdrawn when the business was put under review, thought to have left them disillusioned.

An industry insider says: “If they are faced with no buyers wanting them as a platform, the management is likely to see an MBO as a better option than consolidation. It would be the lesser of two evils.”

Director of retail funds William Russell says: “Any rumours about the future of R&SA Investments are pure speculation.”

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