International investment groups are looking to buyout leading fund manager By Jane Wallace Investmen...
International investment groups are looking to buyout leading fund manager
By Jane Wallace
Investment Week understands a number of international investment groups including Mellon Bank of the US and Hypo Bank of Germany are considering bids for Perpetual.
In addition to being put in play by others, Perpetual has also tried to initiate talks with Foreign & Colonial, which is owned by Hypo Bank, to discuss a prospective merger but F&C declined to take the discussions forward.
Roger Cornick, deputy chairman at Perpetual, said: "From time to time people come along with ideas and it is our fiduciary duty to maximise shareholder value so we must consider them.
"Possibly someone will come along with an idea we are interested in, but no-one has done that yet.
"The reality is that the Merrill/Mercury and Prudential/ M&G deal have set the benchmark so high that few organisations can afford to swallow it. We could not sell at anything less than the M&G price without raising questions."
It is understood Hypo Bank was keen to see a deal done and has even considered making a bid itself but feels the potential price, which could be between £50 and £60 a share, too expensive.
Mellon, which took over Newton Fund Managers in October 1998, has also examined the potential appeals of Perpetual but as yet has not taken it further.
Jonathan O'Driscoll, head of Mellon Trust (Europe), said: "We would consider any good quality provider in the market at a sensible price but we are not looking at any particular company at the moment."
Recent research by Credit Suisse First Boston (CSFB) estimates Perpetual is worth £55 per share. On 7 July, Perpetual's shares were at £35.67.
CSFB arrived at its price tag with reference to the Prudential/M&G sale which had a P/E ratio of 33 times, 10.5% of funds under management.
A high price tag attatched to M&G was needed to persuade the EsmŽe Fairburn Trust, a charitable foundation, to sell its majority 33.3% stake.
There is a similar situation at Perpetual. The major shareholder is chairman Martin Arbib, who personally owns 10% of Perpetual and a further 30% through trusts. Cornick and chief executive officer David Mossop have 2% each.
Another similarity is that both companies are concentrated on high margin UK retail business and have strong brands in that market but neither have a large presence in Europe, the US or the institutional investment market.
Much of the value inherent in Perpetual comes through the key personnel. According to CSFB, the three main members of staff are Arbib, Cornick and Mossop.
Compared to 6% of 55-64 years olds
Sam Gold and Doug Abbott to take reins
Bionic advice for private clients
Creates £11bn asset management business