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Schroders tipped for Gartmore deal

Schroders is the hot favourite to buy Gartmore, with the firm’s American owners understood to have decided on a trade sale.

Gartmore’s US owner Nationwide Mutual is reported to have ruled out a flotation of the business in favour of selling it, with industry sources believing that that Schroders is the most likely buyer although several overseas insti- tutions are also believed to be in the running.

Schroders is understood to be particularly keen on snapping up Gartmore’s hedge fund business run by Roger Guy.

Guy was linked to a poss- ible move to Schroders this summer but he signed a new contract with Gartmore in September following Schro-ders’ recruitment of former Jupiter European manager Leon Howard-Spink. As well as European long-only money, Guy runs Gartmore’s AlphaGen Capella hedge fund with assets of 1.2bn. Schroders has no hedge fund business and if it bought the firm, Guy could be freed up to concentrate on running hedge money by handing over his European selected growth fund to Howard-Spink. Both firms also operate multi-manager businesses which could benefit from econ- omies of scale.

Schroders has 800m of cash on its balance sheet and Gartmore is valued by ana- lysts at up to 1.1bn. Schroders chief executive Michael Dobson has said on several occasions that he will look at potential acquisitions and the firm was thought to have been in the running for Deutsche Asset Management’s UK business before it was bought by Aberdeen earlier this year.

Schroders and Gartmore refuse to comment.

Bestinvest business development manager Justin Modray says: “Gartmore’s hedge fund business would cert- ainly be attractive for Schro-ders and the firm also has some very good managers on the long-only side. Schroders could make the acquisition work financially and poten- tially consolidate some of Gartmore’s funds into its own range to save money.”

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