19 Jul 2010
The departure last week of Guillaume Rambourg from Gartmore Investment Management has helped the fund manager to draw a line under internal disciplinary breaches by one of the firm’s key traders. Rambourg resigned from Gartmore in a bid to limit damage to the firm and to focus fully on clearing his name with the Financial Services Authority, which is probing his general conduct.
The market reaction to Rambourg’s resignation has been muted. Gartmore stock rose 4.5% to 108.5 pence on Monday, though this is a very partial recovery of the losses that ensued when Rambourg was originally suspended in April for breaching internal procedures about directing trades. In the meantime, Gartmore management is preparing accounts ahead of the presentation of interim results on August 17.
The move draws a curtain on Rambourg’s 14 year career at Gartmore. During the period he worked closely with Roger Guy, managing AlphaGen Capella, an equity long/short fund and long-only funds as well as institutional mandates.
Rambourg retains his 3.8% stake in Gartmore following the fund manager’s float in December 2009. The holding is subject to lock-up provisions that limit the sale of shares to one-third of the stake at the end of the first, second and third years following the float.
Gartmore’s plan is that Guy will continue to lead the European long/short equities team with support from Darrell O’Dea who joined from Threadneedle earlier this year. They are supported by 10 analysts and Wagstaff said there is no plan in the short term to recruit a replacement for Rambourg.
Hellman & Friedman, the US private equity group that brought Gartmore to the market last year, now holds a 24% stake in the firm. Its six month lock-up on the remaining stake ended recently. Hellman & Friedman have two board seats and Wagstaff said they have been “actively involved all the way along” in Gartmore’s managing of the process.
It is possible that Gartmore might appeal to a suitor in the current M&A merry-go-round sweeping the asset management sector. Though an opportunistic move can’t be ruled out, it is likely that any buyer would have to propose a substantial premium to the current share price. Any bidder would also require the tacit approval of Guy who is a major shareholder and the biggest performance fee earner for the firm.
Gartmore’s attractive international global distribution capability and its record of success in hedge fund management are likely to attract interest from putative suitors. About 33% of its £3.9 billion in hedge funds assets are based in the UK, with 30% in Europe, 22% in Asia and 12% in North America.
Gartmore’s slimmed £360 million market cap is drawing the attention of some analysts. Liberum Capital wrote in a recent note that a forecast P/E of 6.8 for 2010, falling to 6.2x in 2011, “looks exceptionally cheap compared to the 14.6x at Ashmore or the 10.8x at BlueBay (each for the year to June 2011). In May, meanwhile, Bank of America Merrill Lynch slapped a 200 pence share target on Gartmore but judged that volatility risk is high.
The market reaction to Rambourg’s resignation has been muted. Gartmore stock rose 4.5% to 108.5 pence on Monday, though this is a very partial recovery of the losses that ensued when Rambourg was originally suspended in April for breaching internal procedures about directing trades. In the meantime, Gartmore management is preparing accounts ahead of the presentation of interim results on August 17.
“Guillaume’s decision last week to leave the firm was taken because he decided it was in the best interests of everyone – shareholders, investors and employees,” Phil Wagstaff, Gartmore’s global head of distribution said in an interview. “This allows Gartmore to get on with its day to day business.”
The move draws a curtain on Rambourg’s 14 year career at Gartmore. During the period he worked closely with Roger Guy, managing AlphaGen Capella, an equity long/short fund and long-only funds as well as institutional mandates.
“The overall feeling here is that Guillaume has been here a long time and people are sorry to see him go, but they respect him for making this difficult decision,” Wagstaff said. “They appreciate the fact that Gartmore can move forward and put the regulatory matter behind us.”
Rambourg retains his 3.8% stake in Gartmore following the fund manager’s float in December 2009. The holding is subject to lock-up provisions that limit the sale of shares to one-third of the stake at the end of the first, second and third years following the float.
“The overall message from investors I’m getting is that they understand why Guillaume resigned,” Wagstaff said. “When Guillaume was originally suspended that was the point of maximum impact for clients. Many are now seeing his resignation as the natural consequence of this.”
Gartmore’s plan is that Guy will continue to lead the European long/short equities team with support from Darrell O’Dea who joined from Threadneedle earlier this year. They are supported by 10 analysts and Wagstaff said there is no plan in the short term to recruit a replacement for Rambourg.
Hellman & Friedman, the US private equity group that brought Gartmore to the market last year, now holds a 24% stake in the firm. Its six month lock-up on the remaining stake ended recently. Hellman & Friedman have two board seats and Wagstaff said they have been “actively involved all the way along” in Gartmore’s managing of the process.
It is possible that Gartmore might appeal to a suitor in the current M&A merry-go-round sweeping the asset management sector. Though an opportunistic move can’t be ruled out, it is likely that any buyer would have to propose a substantial premium to the current share price. Any bidder would also require the tacit approval of Guy who is a major shareholder and the biggest performance fee earner for the firm.
Gartmore’s attractive international global distribution capability and its record of success in hedge fund management are likely to attract interest from putative suitors. About 33% of its £3.9 billion in hedge funds assets are based in the UK, with 30% in Europe, 22% in Asia and 12% in North America.
Gartmore’s slimmed £360 million market cap is drawing the attention of some analysts. Liberum Capital wrote in a recent note that a forecast P/E of 6.8 for 2010, falling to 6.2x in 2011, “looks exceptionally cheap compared to the 14.6x at Ashmore or the 10.8x at BlueBay (each for the year to June 2011). In May, meanwhile, Bank of America Merrill Lynch slapped a 200 pence share target on Gartmore but judged that volatility risk is high.
