Gartmore future secure following management buyout

The future of Gartmore Investment Management was secured last week following its acquisition by Hellman & Freidman, an American private equity group. H&F and Gartmore’s management will become the major shareholders of Gartmore, with the deal expected to be completed in July, subject to regulatory approval.

The deal follows an anticipated injection of 500-600m of capital from H&F for the management buyout, from current parent Nationwide Mutual Insurance Company. The acquisition includes Gartmore’s UK, European, Japanese and Latin American businesses, and secures the future of all its fund managers.

Following a strategic review, Nationwide Mutual put Gartmore up for sale at the end of last year. The businesses excluded from the deal are Riverview, the group’s hedge fund and hedge fund of funds business, and the US retail business (previously known as Villanova Capital). However, Gartmore will retain the three Gartmore-branded US Oeic funds – US Focus, US Growth and US Opportunities – with no changes to any of the managers.

H&F will own a small majority stake in the newly structured company, while the rest will be owned by Gartmore’s current senior executives and fund managers, each of whom has put their own capital into the deal. This will give them day-to-day control of the business. According to Gartmore, this ownership model aligns the interests of shareholders and key fund managers.

“This MBO ensures there is continuity at Gartmore, as we have been led to believe that star managers such as Roger Guy, Chris Burvil, Philip Ehrmann and Ashley Willing will be staying,” says Darius McDermott, managing director of Chelsea Financial Services. “This is good news for our clients, who were concerned about Gartmore’s future, and good news for investors, who were unsure about placing money with them.”

Guy, who runs the group’s 1.9bn European Selected Opportunities fund, will sit on the board of directors, alongside chief executive officer Jeff Meyer and head of distribution Paul Feeney. Three H&F representatives will also sit on the board, alongside one independent director.

“Both my teams and myself are 100% committed to Gartmore as a result of this transaction,” says Guy.