Doubts over how Jupiter's future management will run three investment trusts with a combined market ...
Doubts over how Jupiter's future management will run three investment trusts with a combined market cap of £750m were raised last week.
The three boards of Jupiter Split, Jupiter Dividend & Growth and Investment Trust of Investment Trusts all decided to serve protective notices on Jupiter Asset Management.
The board of Jupiter Split said following the recent developments at Jupiter International, referring to the departure of John Duffield, it had served the required two years' notice on Jupiter to protect shareholder value in the event of any changes in circumstances relating to the management and administration of the company. In a statement, the board, of which Duffield is a member, added: "The directors may consider changing the investment management arrangements or the company in due course. If such a decision is made, a beauty parade will be held in order to identify the most appropriate investment manager."
Duffield is also a board member of the other two trusts. Their respective announcements were made on 20 June, the day after that of Jupiter Split. Michael Polson, a corporate lawyer specialising in investment trusts at Dundas & Wilson, said: "Boards are almost obliged to serve these notices in the circumstances of changes in management. By serving them it starts the notice clock ticking. If a board decides to change the management in six months time after a beauty parade it will only have to pay 18 months compensation to Jupiter instead of the full two years."
One trust that has recently gone through the beauty parade process is the £93m British Income & Growth split capital trust. The trust is currently run by Gartmore in Glasgow. In light of the defection of its managers Diane Wilde and Ross Watson to Aberdeen Asset Management in April the trust decided to also end its relationship with Gartmore and ask for presentations from other fund management houses. The trust has agreed a contract with Aberdeen, which will not involve any extra costs to shareholders or the termination of the existing management contract.
Gartmore has recruited Richard Prvulovich, previously at Investec Guinness Flight, and Brian Gallagher, from Murray Johnstone, following the departure of Watson and Wilde.
According to Gartmore only one of the five split cap trusts it manages is planning to hold a beauty parade, Gartmore SNT. The other four are High Income, Scotland, Shared Equity and Second Scottish National.
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