Gartmore buys Govett in 21m euro deal
UK – Gartmore Investment Management is to acquire Govett Investments Limited and its one billion pounds (1,464 billion euros) of assets under management.
Gartmore today announced that it had entered into an agreement with Allied Irish Banks (AIB) to acquire the majority of the management contracts of Govett Investments, its UK asset manager, following the decision by AIB to reorganise its asset management business.
The deal will result in Gartmore acquiring one billion pounds of assets under management across onshore and offshore mutual funds, investment trusts and institutional and private client mandates. It is expected that Gartmore will pay up to 14 million pounds (21 million euros) for Govett over a three-year period.
With regulatory approvals “well-advanced”, Gartmore expects to assume responsibility for a significant portion of the funds by mid-November.
Govett was purchased by AIB in 1995, primarily as a Far East/emerging markets asset management specialist, and it “contributed satisfactorily to Group profits for several years,” says AIB.
“However, changed market conditions, notably the Asian crisis of 1997/8, fundamentally impaired the business and led to a significant reduction in funds under management. Despite substantial restructuring and some significant investment performance across Govett’s range of products the business lacks the scale required for a UK based asset management operation and it will not return to profitability in the near future,” AIB said in a press statement.
Gartmore will not be taking on Govett staff, and Govett will be closing down its operations in Singapore. It also has offices in Dublin, Baltimore and London. Management contracts excluded from the sale will be managed by AIB’s Irish based asset management company, AIB Investment Managers (AIBIM).
Gartmore could well be making further acquisitions in the market, according to chief executive officer, Glyn Jones. “Nationwide Mutual Insurance Company, our ultimate parent company in Colombus, Ohio, has identified asset management as a core business, With their strong commitment and support, we are well placed to continue our organic growth strategy, and selectively, to make further acquisition should the opportunities arise at the right price.”