Dresdner set to suffer revenue blow if charter shareholders vote for management change
Dresdner RCM Global Investors' closed-end funds division stands to lose 25% of its revenue if the Charter European Trust moves to Hendersons.
The board of Charter decides this week whether to recommend Hendersons' offer to take on the trust and merge it with Henderson Eurotrust to shareholders. The board could also come up with its own proposals and an EGM for shareholders must be held by 5 March.
Dresdner RCM has the management contract for 13 investment trusts and, based on figures taken from Trustnet on 31 January 2002, these trusts create an annual revenue of £8.77m to the group, with the £412.7m Charter trust accounting for £2.70m of that revenue.
Such a loss would have a large impact on the profitability of the closed-end funds division but Dresdner does not believe this would affect its management contracts with the other investment trusts it runs, including Brunner and Merchants.
Tessa Murray, head of communications at Dresdner, said: 'Charter is a very important client to us but we still have other large clients and we are well resourced, with Dresdner as a whole being the third largest asset management company in the country.
'We remain committed to investment trusts and are determined to see the business grow. To demonstrate this commitment we launched the British Portfolio Trust last year, which raised £70m. We also are not convinced we will lose Charter.'
In addition to Hendersons there have been rumours that both Jupiter and Gartmore have looked at mounting bids. Should the Hendersons proposal be accepted the merged trust would be run in the same manner as the Eurotrust, managed by Tim Stevenson.
Eurotrust invests in medium to large continental European companies, while Charter, managed by Juliet Cohn, buys into pan-European large-cap stocks and is very growth orientated.
If the proposals are accepted Hendersons would act as the interim manager of Charter to realign the assets in preparation for implementation of the merger.
Over five years to 31 December 2001, the share price on Charter European Trust has returned 36.25%, ranking it nine out of 10 in the sector while the share price of Henderson Eurotrust has risen 84.04%, ranking it three.
Dresdner will also lose £366,000 of investment trust revenue when the Dresdner RCM Emerging Markets trust winds up following a shareholder vote two weeks ago.
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