F&C boosted by jump in assets under management

F&C Asset Management reported higher-than-expected assets under management in its third quarter, boosted by the takeover of rival Thames River and rising equity and bond markets.

F&C said AuM swelled 13.5 per cent to £108.2bn in the quarter to September 30, beating analyst forecasts for between £105bn and £107.7bn after winning £600m of net new business.

Analysts at JP Morgan Cazenove described the performance as encouraging but retained their "neutral" rating on the stock.

KBC Peel Hunt confirmed a "buy" recommendation and noted the introduction of Sherborne Investors to the shareholder list was a "clear catalyst to improved shareholder returns."

Edward Bramson's Sherborne lifted its stake to 14.6 percent in August, triggering speculation a bid was imminent and raising doubts about the future of F&C Chief Executive Alain Grisay. Sherborne has not outlined its strategy.

F&C's results reflect improving confidence among investors seeking extra returns or ways to hedge their risks after a period of caution in the wake of the global financial crisis.

F&C inflows over the quarter were broadly in line with larger rival Aberdeen Asset Management's (ADN.L) 621 million pounds net new business, while smaller rival Henderson (HGGH.L) posted outflows.

Larger rival Schroders Investment Management (SDR.L) is due to report on November 9.

SPECIALIST TARGET

F&C saw outflows of about 1.1 billion pounds, mostly from institutional funds, offset by inflows of more than 5.8 billion pounds, boosted mainly by £4.2bn from Thames River and inflows into institutional business.

This is in marked contrast with the previous quarter, when F&C shed £605m.

A stronger euro versus sterling added about £3.3bn. Positive market movements in equities and fixed-income increased assets by £4.8bn.

F&C said it secured £1.6bn of new business commitments at the end of the quarter and was targeting new business in specialist and higher-margin products.

"We expect institutional redemptions to slow further in 2011, following the trend in 2010," it said in a statement, adding it also expected weaker growth in new institutional business in the fourth quarter.

F&C completed the acquisition of Thames River Capital in September, paying £33.6m plus £15m to retain key staff.