HENDERSON GROUP yesterday became a front-runner to buy Gartmore fund management group after shelving a payout to shareholders which will give it the necessary fire power, reports The Times .
According to the paper, Roger Yates - Henderson’s chief executive - did not name Gartmore but said he was looking at a specific potential acquisition. The £200m payout promised for February six months ago is now postponed pending a decision on the acquisition within a few weeks.
Analysts say they are certain Gartmore, which is expected to fetch £600m, is the target as Katrina Preston of Bridgewell Securities told the paper “there’s little doubt in my mind that it’s Gartmore”.
The Times points out Gartmore would dramatically strengthen Henderson’s hedge fund range, its presence in Europe and would beef up its retail fund management business. A combination of the two businesses would create a group with £115bn of funds under management, overtaking Schroders and putting it within striking distance of F&C.
Morgan Stanley is conducting an auction of Gartmore on the instructions of its owner, the US mutual insurer Nationwide. A preferred bidder is expected to be chosen by the end of March.
CHANCELLOR GORDON Brown indicated on Tuesday the government would act to meet pension fund demands for an increase in the supply of long-dated government bonds in 2006-07 in the Budget later this month, reports The Financial Times.
Speaking at a bond market conference in London, he said the Treasury was listening to recommendations in the market, almost all of which were urging a rise in the issuance of long-dated bonds.It was also considering how to match the soaring demand for long-dated paper with supply.
Pension funds and economists have urged the government to increase the supply of long-dated gilts substantially to push yields back up, reduce the measured liabilities of defined benefit pensions and save money on interest payments for taxpayers.
The heavy demand for long bonds to match pension liabilities has trapped funds in a vicious circle that is driving up the price and cutting yields. Yields of government bonds with maturities over 20 years have fallen to less than 4% this year, while long-dated index-linked yields have fallen below 1%.
His statement suggests the Treasury’s planned gilts sale of nearly £70bn in 2006-07 will be more skewed towards long-dated bonds than this year’s was. In 2005-06 almost half the £52bn gilt sales were long-dated bonds.
ROYAL BANK OF Scotland has appeased the City by putting its long-running acquisition strategy on hold to hand £1bn to investors through its first share buyback in recent memory, reports The Guardian.
The Edinburgh-based bank, which has grown rapidly since the takeover of NatWest six years ago, is also raising its dividend in an attempt to show shareholders it does not intend to spend its capital on any more major deals.
The return of cash to shareholders, announced as the bank reported a 21% rise in pre-tax profits for 2005 to £7.9bn, followed calls from some analysts and investors for RBS to take action over its share price underperformance. Its shares were the fast risers in the FTSE 100 yesterday, reaching their highest levels for almost four years, closing at £19.09, up 50p.
Sir Fred Goodwin, the chief executive, denied that the buyback was a result of investor pressure and insisted the bank had a "pretty good relationship" with its shareholders.
ROBERT PICKERING, chief executive of JP Morgan Cazenove, has said the joint venture which brought the two firms together exactly a year ago would almost inevitably lead to a full-blown acquisition of Cazenove by JP Morgan, reports The Daily Telegraph.
Pickering told the paper: "The likelihood is at some point in the future we will be owned by JP Morgan."
Under the joint venture structure, JP Morgan injected £110m into Cazenove and effectively bought half of the business. There are put and call options in place which allow both sides to either buy or sell the remaining business four years from now.
Since deciding to give up 180 years of independence to link up to one of America's largest investment banks, Cazenove has had a bumpy rid, losing several high profile clients such as the drinks group Diageo, retail bank HBOS and Marks & Spencer.
Despite the holes in JP Morgan Cazenove's client list, it recorded an 18% increase in revenues to £342m on a pro forma basis. Bonuses to its 800 staff totalled £81.7m.
AND MAJOR REGULATIONS introduced since 1998 have cost British business more than £50bn, according to new figures released yesterday from the British Chambers of Commerce (BCC), reports The Scotsman.
The Burdens Barometer, which calculates costs to business based on the government's own figures, reports the total cost has risen from £39bn in 2005 to more than £50bn in 2006.
Liz Cameron of Scottish Chambers of Commerce told the paper: "There is no doubt that many valuable hours of our members' time, which should be devoted to running their businesses, are instead being diverted to dealing with increasing amounts of paperwork and red tape."
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
Partner Insight: Continuing the Architas education series for clients.
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