Asset management firm poses series of questions to Sherborne in week before emergency general meeting that will decide company’s fate
F&C Asset Management has launched a new attack on Sherborne, the activist investor trying to seize control at the firm.
In a statement, F&C suggests Sherborne misunderstands the asset manager’s strategy and questions the track record of the activist’s chairman, Edward Bramson.
F&C also reveals that assets under management were up in 2010 after four years of net outflows.
The fate of F&C, one of the UK’s oldest fund management businesses, will be decided on February 3 at an emergency general meeting called by Sherborne.
The activist – which has amassed a stake of 17 percent in F&C – is attempting to oust the asset manager’s chairman Nicholas MacAndrew and board member Brian Larcombe.
Bramson wants to install himself as chairman and bring in two allies to the board: former PricewaterhouseCoopers chairman Ian Brindle and ex-Clifford Chance partner Derham O’Neill.
In F&C’s statement, the investment firm responds to a letter sent by Sherborne to its shareholders last week and then poses a series of questions of its own to the activist.
Among the questions, F&C asks whether Sherborne plans to conduct a capital raising at the asset manager and if Bramson has the time to take on another investment, given his other responsibilities.
One of the central disputes between the two parties centers around F&C’s recent acquisitions of REIT Asset Management and Thames River Capital.
F&C’s management argues that the purchases add to shareholder value by bringing new expertise to the company and diversifying its product range away from insurance products.
‘Sherborne appears to have misunderstood the economics of and rationale for the REIT Asset Management and Thames River Capital acquisitions,’ states F&C.
Sherborne, on the other hand, believes the acquisitions will not improve shareholder value as they make money from ‘volatile’ revenue streams that are not valued highly by the market.
F&C’s statement also draws attention to one of Bramson’s previous investments, at gym equipment manufacturer Nautilus, which F&C says has fallen around 75 percent since Sherborne took a 20 percent stake.
