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Schroders rules out bid for ailing fund manager Gartmore

This article is more than 13 years old
Schroders attracted £5.4bn in new money in the third quarter
Henderson raised its stake in Gartmore from 12.4% to 14.2%

Schroders has ruled out a bid for its troubled rival Gartmore, which was today trying to head off an outflow of funds from disgruntled investors following the departure of its star fund manager, Roger Guy.

As the Anglo-Australian fund manager Henderson increased its stake in Gartmore, an investment trust managed by the troubled firm admitted it was "reviewing the situation". Shares in Gartmore, which made their debut on the stock market 11 months ago at 220p, rose 4% to 111p on hopes that a suitor would emerge for a business that had revolved around Guy, who is leaving by next May.

Even as one possible suitor, Schroders, ruled itself out, the move by Henderson to increase its stake from 12.4% to 14.2% fuelled speculation that it could be interested after last year's takeover of New Star. Henderson disclosed to the stock market that it had bought more than 5m shares at 101p on Monday, when Gartmore was struck by the news of Guy's departure. City sources pointed out that the shares were held in funds run by Henderson rather than on the company's behalf and may not reflect the management's thinking.

The departure of Guy, a 44-year-old fund manager whose reputation had drawn investors to Gartmore, is the latest in a series of problems for the firm. His close colleague Guillaume Rambourg resigned in July to clear his name in a Financial Services Authority inquiry, while Gervais Williams, another star fund manager, left in September after a long career.

The departure of two managers was also announced alongside Guy's: Darrell O'Dea, who was hired in April, and the chief investment officer, Dominic Rossi, who is leaving to join Fidelity.

The board of Gartmore European Investment Trust told the stock market that it was "mindful" of the potential impact that Guy's departure could have on its investments. "The board ... will review the situation with Gartmore and consult with shareholders," the trust said.

The remaining Gartmore managers are understood to be working frantically to ensure that clients do not pull out. Some £1.5bn has been withdrawn this year.

Meanwhile, Schroders was a big riser on the FTSE 100 after it announced it had attracted £5.4bn of new funds in the third quarter. It now has £181.5bn under management, up from £140bn a year ago.

Pre-tax profit for the first nine months trebled to £283m., buoyed by higher performance fees from rising markets, which fuelled an 87p rise in its share to £16.67. The shares last traded at these levels a decade ago during the dotcom boom.

Michael Dobson, Schroders' chief executive, ruled out any interest in Gartmore as he pointed out that his previous deals had been small, bolt-on acquisitions.

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