GLOBAL - Schroders today announced an agreement to buy US$2.5bn London-based fund of hedge funds manager NewFinance Capital.
The move will see Schroders and NewFinance Capital combine their funds of hedge funds activities under NewFinance Capital's management to create a global funds of hedge funds business with US$3.2bn in assets under management.
NewFinance Capital will now become a wholly-owned subsidiary of Schroders, operating as a separate company within the Schroders Group, meaning the NewFinance Capital brand as well as managing partners and senior executives would be retained.
Schroders said the consideration would be $101m with up to a further $41m contingent on certain revenue targets being met, to be paid over a four year period. Lexicon Partners advised Schroders in the transaction.
Separately, Schroders released its preliminary resutls (unaudited) to December 31, 2005, reporting a 60% profit increase in its asset management business to £193.9m. Group profit before tax rose 18% to £250.7m, while funds under management were up 16% to £122.5bn.
The firm reported reduced institutional net outflows of £5.6bn as clients continued to move away from balanced to specialist mandates, down from £8.4bn in 2004. Gross profit in institutional increased to £254.1m as a result of a focus on “higher margin business” and funds under management in institutional ended the year at £78.7bn, compared to £69.1bn the previous year.
“Revenue and profit in asset management rose sharply in 2005 as equity markets performed well and gross profit margins reached 51 basis points,” the report noted. “We are seeing an increasing number of opportunities in liability driven investment for our pension fund clients, and last year we applied this technique when restructuring the investments of the Schroder Retirement Benefits Scheme.”
Meanwhile, Schroders has appointed Luc Bertrand to the Board as a non-executive director with effect from 1 March 2006.
Schroders said Bertrand would also be a member of the Audit and Nominations Committees. By Damian Clarkson and Kristen Paech
Mark Evans has been appointed as a director at Independent Trustee Services (ITS) to lead trustee appointments in London.
The Pension Protection Fund (PPF) is consulting on changes to the actuarial assumptions it uses in valuations in a bid to better reflect the bulk annuity market, with schemes set to move into surplus on aggregate.
Private sector defined benefit (DB) schemes were 96.3% funded on a Pension Protection Fund (PPF) compensation basis at the end of July, according to the lifeboat fund's monthly index.
Conduent has completed the sale of its actuarial and human resource consulting business to private equity investor, H.I.G. Capital.