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Gartmore gears up for acquisitions

GARTMORE, the City investment house, plans to make strategic acquisitions after it has boosted its balance sheet through its expected &pound;1bn stockmarket flotation.<br /><br />Chief executive Jeffrey Meyer said the firm would look to buy medium-size boutiques whose skill sets complemented Gartmore&rsquo;s expertise in hedge funds and European equities.<br /><br />Gartmore&rsquo;s initial public offering is due to take place before Christmas and will value the company at between &pound;500m and &pound;950m, according to analyst estimates.<br /><br />It will allow the company to pay down &pound;250m of its &pound;400m debt pile, the terms of which prohibit cash acquisitions over the size of &pound;75m.<br /><br />Meyer said at the weekend: &ldquo;We will do more acquisitions. We are in a consolidating industry and if you are not on the front foot, you are on the back foot, and someone else&rsquo;s target.&rdquo;<br /><br />He continued: &ldquo;We will seek out mid-size, successful boutiques with business-winning models, out to grow and expand. We are less interested in entrenched businesses that lack an entrepreneurial culture.&rdquo;<br /><br />Meyer will spend the next two weeks trying to persuade institutional investors to participate in the IPO.<br /><br />A secondary offering will also allow Gartmore&rsquo;s private equity owner, Hellman &amp; Friedman, to reduce its 58 per cent stake and let staff sell shares.<br /><br />Around 100 of Gartmore&rsquo;s 360 employees own 42 per cent of the firm, with star fund manager Roger Guy thought to own more than 10 per cent. <br />Although most of&nbsp; the company&rsquo;s 40 fund managers will become overnight millionaires in the float, they will be restricted in the number of shares they can sell.<br /><br />The IPO will lock in 80 per cent of staff shares, with individuals capped at 30 per cent of their holdings.<br /><br />Meyer insisted the timing was not&nbsp; opportunistic, adding: &ldquo;An offering is not successful if it leaves investors with a nasty taste in the mouth.&rdquo;