What’s the price of a star culture? In the case of U.K. fund manager Gartmore Group, apparently about half the firm’s value.
Gartmore’s shares gained 4.6 percent this week [Wednesday] to 101.5 pence ($1.60) after Swan Street Capital announced that it had acquired a 4.9 percent stake in the fund manager. The share price is 18 pence below the level of a month ago, however, and less than half of Gartmore’s initial public offer price of 220 pence in December 2009.
See Institutional Investor’s ranking of Europe’s top money managers here.
Departures of key talent -- the latest being star hedge fund manager Roger Guy, who announced his intention to depart earlier this month -- have triggered an outflow of assets and undermined Gartmore’s market value. Guy manages £3.5 billion ($5.5 billion) of European Large Cap funds, or 16.9 percent of the firm’s £20.7 billion in assets.
News of his departure generated an immediate response, with investment firm Skandia announcing it was terminating a £32 million mandate with Gartmore and Fidelity saying it was no longer including three Gartmore funds on its list of top funds. Gartmore said that Guy’s portfolios would be run by three managers: John Bennett, Leopold Arminjon and Tomas Pinto. The company also moved to retain its remaining fund managers by awarding 15 percent of its share capital to key managers.
In the wake of Guy’s decision to leave the firm, Gartmore announced earlier in November that it had appointed Goldman Sachs Group as an advisor with a view to arranging a sale. Investment groups are already jockeying for position. In addition to Swan Street, U.K. fund manager Henderson Group has raised its holding to 14 percent from 12 percent while hedge fund Lansdown Partners has disclosed a 4.8 percent stake.
Gartmore’s woes began soon after its 2009 IPO. In March the company suspended Guillaume Rambourg, who managed several hedge funds with Guy, for breaking internal compliance rules. Rambourg resigned in June, setting off the first of a wave of redemptions. Several other senior managers resigned over the summer including Dominic Rossi, the chief investment officer.
The erosion of assets has seen Gartmore drop to 94th place in the Euro 100, Institutional Investor’s ranking of Europe’s top money managers. The firm had ranked 72nd in 2003.
In a research note earlier this month, analysts at Morgan Stanley predicted that Gartmore would fetch between 55 pence and 110 pence a share. Hellman & Friedman, the U.S. private equity firm that bought 52 percent of Gartmore for £500 million in 2006, retains a 24 percent stake after last year’s IPO.
