Rival investment firm could take on struggling New Star

12 January 2009 / by Rachel Mason
Troubled fund management group New Star Asset Management, could soon be bought by a rival.

The firm, which was taken over by its banking syndicate in exchange for a debt write-off in early December, today put out a statement to the London Stock Exchange confirming that it has received indicative proposals from rival investment houses.

The frontrunner in the bidding is thought to be Schroders, considered a strong contender because it has a cash surplus of about £700million.

Others thought to have made indicative bids include Gartmore, Henderson, Neptune Investment Management, Aberdeen Asset Management and Threadneedle, while according to the Sunday Telegraph, private equity firm Hellman & Friedman are also said to be interested.

According to reports, the bids – which are being lodged with investment bank UBS - are thought to be worth more than £100million despite the fact that new Star's stock market value is just under £8million.

However, New Star states that all approaches made, both those made in respect of the Company's business or the Company's ordinary shares are at a preliminary stage, and says there can be 'no certainty' that any transaction will be forthcoming.

Six months ago, New Star was overseeing around £20billion of investments, but that has now shrunk to around £12billion. The firm's shares are currently worth just under 3p after hitting a low of 0.5p in early December; a year ago, they were worth 240p.

Last month, New Star, which was founded by City maverick John Duffield, agreed to a rescue refinancing with its banks - HBOS, Lloyds TSB, HSBC, Royal Bank of Scotland and National Australia Bank. At the time it announced that it would be putting proposals to shareholders to de-list following the restructure.

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