New Star lessons need to be heeded

THE TAKEOVER of Gartmore by Henderson isn’t the first time it has rescued a struggling rival.

Two years ago Henderson purchased the stricken New Star fund, which led to 25 per cent of assets being withdrawn amid the takeover as portfolio managers departed.

Some analysts fear Henderson could find itself in the same situation with the Gartmore takeover.

Shore Capital analyst Danielle James said: “People don’t necessarily like the cultural change. Gartmore employees might view this as positive as, they might have viewed themselves on a sinking ship.

“Henderson have got a track record for doing these deals… ultimately that was successful but there was quite a long teething period.”

However, sources close to Henderson believe the Gartmore deal should not suffer the same pitfalls.

As a worse case scenario the company predicts 20 per cent of its assets will disappear as a result of the deal, some five per cent less than at the time of New Star.

TIME LINE | THE FALL OF GARTMORE

January 2011
Henderson purchases Gartmore in a share deal worth £335m. Both firms see a share price lift.

November 2010
Gartmore says Roger Guy is set to retire from day-to-day management, and that chief investment officer Dominic Rossi will resign to join another manager. Gartmore appoints Goldman Sachs to carry out a strategic review. Shares in the fund manager shed a fifth of their value.

July 2010
Gartmore star manager Guillaume Rambourg quits to focus on FSA probe, leading to further falls in share price.

June 2010
UK financial regulator FSA says it will launch its own probe into Rambourg, shares fall.

May 2010
Gartmore says it had seen more than £1bn of withdrawals from the funds it oversees in the wake of Rambourg's suspension.

April 2010
Rambourg returns to Gartmore as analyst, share price leaps.

March 2010
Gartmore suspends Rambourg as it carries out an internal investigation for breach of internal procedures by directing dealers to use favoured brokers. Shares fall by 11 per cent.

December 2009
Gartmore lists on the market for 220p per share, shares sink to 212p on its market debut.

Simon Warshaw

UBS

INVESTMENT bank UBS led the talks for Henderson as sole corporate broker, sponsor and joint lead arranger and joint bookrunner.

Simon Warshaw head of investment banking at UBS, led the deal as lead financial adviser. Warshaw has spent 24 years at UBS, and helped found the bank’s media sector group. He has featured on the Guardian’s Media 100 list for his role in Lord Carter’s Digital Britain report. Ondra partners, the boutique set up in the wake of Lehman’s collapse also acted for Henderson, with Michael Tory and Stewart Bennett as part of the team. Goldman Sachs advised Gartmore.