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New Star discount bids dashed by high prices

New Star is believed to have put plans to set up a vehicle to acquire discount brokerages on hold after the companies it approached reportedly demanded astronomical prices.

In a move which would have made it the first fund manager to join the dash for distribution, New Star is believed to have approached a number of top brokerages in a bid to secure distribution before depolarisation.

One of the options that chairman John Duffield was believed to be considering was for New Star to acquire and merge four or five brokerages to capitalise on their combined client bases and so raise the value of the asset management business.

But after months of talks, the fund manager is believed to have shelved its plans for the moment as many of the brokers approached were either reluctant to drop their asking prices or expressed no interest in selling.

A senior fund manager source says: “There is a perception that more and more power is shifting towards distributors and New Star would want to be a part of that. It also makes sense as a diversifying move, as in a post-polarised world the key element where value can be added is advice. I see the logic in its efforts.”

New Star chief executive Howard Covington said he was unable to comment.

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