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 £1bn stockmarket flotation.
Chief executive Jeffrey Meyer said the firm would look to buy medium-size boutiques whose skill sets complemented Gartmore’s expertise in hedge funds and European equities.
Gartmore’s initial public offering is due to take place before Christmas and will value the company at between £500m and £950m, according to analyst estimates.
It will allow the company to pay down £250m of its £400m debt pile, the terms of which prohibit cash acquisitions over the size of £75m.
Meyer said at the weekend: “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’s target.”
He continued: “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.”
Meyer will spend the next two weeks trying to persuade institutional investors to participate in the IPO.
A secondary offering will also allow Gartmore’s private equity owner, Hellman & Friedman, to reduce its 58 per cent stake and let staff sell shares.
Around 100 of Gartmore’s 360 employees own 42 per cent of the firm, with star fund manager Roger Guy thought to own more than 10 per cent.
Although most of the company’s 40 fund managers will become overnight millionaires in the float, they will be restricted in the number of shares they can sell.
The IPO will lock in 80 per cent of staff shares, with individuals capped at 30 per cent of their holdings.
Meyer insisted the timing was not opportunistic, adding: “An offering is not successful if it leaves investors with a nasty taste in the mouth.”