NatWest is Seeking Buyer for Gartmore
November 8, 1999
Gartmore Investment Management of London, the pension and investment management unit of National Westminster Bank, also of London, is for sale.
NatWest, on Oct. 27, announced its intention to sell the Gartmore unit, the fifth largest pension fund manager in the U.K. with about $87 billion under management. NatWest is Britain's third largest bank.
Gartmore, founded in 1969, manages private and pension funds, 14 investment trusts - the UK equivalent of U.S. closed-end funds - as well as 50 mutual funds for U.K. investors. Gartmore also sponsors two dozen offshore funds domiciled in Jersey, the Channel Islands. In addition, it manages the pension plan of NatWest. It also sub-advises international equity segments of three Nations Bank Funds in Charlotte, N.C. Nations Bank Funds are advised by Bank of America Advisors.
The announcement of its intention to sell Gartmore was made in conjunction with NatWest's announcement of its plans to defend itself against a hostile takeover bid made by the Bank of Scotland. Bank of Scotland, of Edinburgh, Scotland last month made a hostile bid for NatWest for $35 billion. In its regulatory filing to make the bid for NatWest, Bank of Scotland announced it planned to sell the Gartmore unit if it was successful in its attempt to take control of NatWest.
NatWest has hired Donaldson, Lufkin and Jenrette of New York to help sell Gartmore, according to Peter Yandle, a spokesperson for Gartmore in London. Yandle declined to identify potential buyers or say if any discussions related to Gartmore's sale are under way.
"We're very happy with being part of NatWest group," he said. "But we fully respect their decision." A spokesperson for NatWest in London said the bank had no comment.
Gartmore was founded by British Commonwealth, a British shipping firm thirty years ago. In 1990, Gartmore was sold to Banco Indosuez of Paris. Banco Indosuez subsequently sold 25 percent of the firm in a public offering. NatWest purchased both the publicly-sold and privately-held shares of Gartmore in April 1996, making Gartmore a wholly-owned subsidiary. NatWest then merged its fund management business into the Gartmore unit. Gartmore invests in growth stocks.
While the investment management industry in the U.K. is intensely interested in Gartmore's expected sale, the news could have some repercussions in the U.S.
In July 1995, NationsBank created a 50/50 joint venture with Gartmore which is now known as Gartmore Global Partners. Gartmore Global Partners acts as the sole sub-adviser to the Nations Emerging Markets Fund and the Nations International Growth Fund. Under a multi-manager arrangement, Gartmore also manages a slice of the Nations International Equity Fund along with Putnam Investments of Boston and INVESCO of Denver, Colo. The three funds had a combined $937 million in assets as of Sept. 30.
A NationsBank spokesperson declined to speculate on the future of the NationsBank venture with Gartmore once the firm is sold. NationsBank is the sponsor of 70 mutual funds, with a combined $68 billion.
Despite its pending sale, it is business as usual for Gartmore. Earlier this month, Gartmore introduced two hedge funds aimed at attracting wealthy investors. The launch represents Gartmore's entry into the hedge fund arena. The AlphaGen Capella and AlphaGen Selector funds will be sold to investors with at least $1 million in assets. The firm is also working on strengthening its offshore business, according to Yandle of Gartmore. It recently opened an office in Frankfurt, Germany that now handles the operations for four of Gartmore's offshore funds.