Gartmore to float before Christmas
Fund management group Gartmore has confirmed plans to float on the London Stock Exchange at the end of the year, in what will be the biggest initial public offering this year.
The firm is intending to float between 30% and 50% of new and existing shares, which will value the company at around £1 billion. The asset manager, which had £21.8 billion of funds under management in September, will use the money raised - around £300 million - to cut its net debt to £150 million.
In addition, private equity group Hellman & Friedman will reduce its 58% stake in the firm, although it will still maintain a small holding.
Current and former employees are expected to sell a fifth of their shares, giving them tens of millions of pounds of shares. The remainder will be subject to staggered lock-in arrangements due to expire in 2013.
The flotation will also net millions of pounds for bankers and brokers Bank of America Merrill Lynch, Morgan Stanley, UBS, Citibank and Fox-Pitt, Kelton.
Jeffrey Meyer, chief executive of Gartmore, says: “We believe that a stockmarket listing now is the logical next step in Gartmore’s development. It will raise the profile of the group and provide benefits for our clients, shareholders and current and prospective employees.”
Gartmore started life as NatWest’s fund management arm when it was managed by now Labour City minister Paul Myners.
In 2000, after Royal Bank of Scotland acquired NatWest, the firm was sold to Nationwide Mutual for £1 billion. Hellman & Friedman then bought Gartmore in a £550 million deal in May 2006.
Back in 2007, the group mooted plans to float with a £1.5 billion price tag. However, the credit crunch, sector turbulence and depressed valuations put the plans on hold. In the first nine months of the year, Gartmore made operating profits of £38 million on revenues of £207 million.
A document which describes and advertises a new share issue or flotation (IPO in US) to potential investors, the contents of which are regulated by UK company law, the Financial Services Authority (FSA) and the London Stock Exchange. The prospectus should include details such as a description of the company’s business, financial statements, biographies of executives and directors, detailed information about their remuneration, any current litigation, a list of assets and other information deemed relevant for consideration by a prospective investor.
An individual employed by an institution to manage an investment fund (unit trust, investment trust, pension fund or hedge fund) to meet pre-determined objectives (usually to generate capital growth or maximise income) in prescribed geographic areas or investment sectors (such as UK smaller companies, technology or commodities). The manager also carries the responsibility for general fund supervision, as well as monitoring the daily trading activity and also developing investment strategies to manage the risk profile of the fund.
Flotation involves a company selling a percentage of itself in the form of shares on a regulated exchange, such as the London Stock Exchange. Prior to flotation, the company is independently audited and valued and shares offered for sale at a price determined by the company’s value. After flotation, the shares are traded on the exchange for what the market deems they are worth. Shares are bought by other financial institutions and private investors.