Pressure rises on F&C ahead of vote

WITH just three days to go before F&C Asset Management’s boardroom showdown with activist shareholder Sherborne Investors on Thursday, mood in the City has swayed toward the F&C board.

Early enthusiasm for Sherborne’s proposed board takeover, replacing chairman Nick MacAndrew with its founder Edward Bramson, has been replaced with caution as investors weigh their options.

Sherborne is supported by key investor Aviva, and shareholder service ISS concluded Bramson’s presence on the board would benefit shareholders in the long term, despite his lack of asset management expertise. “Bramson has a very good track record as a turnaround specialist,” it said. “Relevant board experience is more important than industry experience.”

Many F&C investors are keen to see what fresh blood could do – but Sherborne has raised concerns by apparent misjudgements in its view of F&C. It has come under fire for arguing that F&C’s purchases of REIT Asset Management and Thames River Capital were expensive and contributed little to assets under management and earnings. Analysts see the Thames River deal as a transformational move that should boost F&C by adding a high-growth, high-margin firm with an ambitious leader, Charlie Porter. And as a people business, Porter represents exactly the sort of talent F&C would suffer from losing.

Singer Capital analyst Sarah Ing said F&C was dogged by structural challenges dating back to its divestment from Friends Provident, but the board’s strategy was sound.

“F&C is constrained by its structure,” she said. “But management has invested in high margin businesses. Short of breaking the firm up, it is unclear what would help.”