BRITANNIC is extremely keen to acquire Abbey National Asset Managers – sources familiar with Britannic revealed yesterday – raising hopes that ANAM’s (pounds) 28bn of funds could stay in Glasgow.
Abbey National is universally expected to abandon ANAM, either by selling the division’s contracts to run what are mainly in-house life funds for about (pounds) 200m or even by shutting the operation and outsourcing management of the funds. Either way, the outlook looks bleak for ANAM’s 50 frontline fund managers, and some 60 back- office staff in Glasgow, with any buyer likely merely to cherry- pick key people.
However, a deal with life assurance-to-investments group Britannic could be crucial to Glasgow retaining critical mass in fund management because the ANAM assets would stay in the city. Britannic Asset Management, the only part of its group which offers growth potential following closure of the life and pensions operations to new business, is based in Glasgow and manages more than (pounds) 14bn.
While Britannic has been touted as a potential bidder, the extent of its interest in ANAM is only now becoming clear.
It looks certain to be a serious challenger to ISIS, which bought life fund management contracts from Royal & Sun Alliance in 2002 in a similar deal to that which could be involved with ANAM, if Abbey decides to sell its funds business.
One of the senior sources familiar with Britannic said: “If it is going to happen, I think Britannic has to look at it seriously. It (ANAM) is in its neighbourhood. Britannic only has BAM in terms of a growth strategy. They have to try and get it. If BAM doesn’t get it, it is not good news for Glasgow.
“At the moment, we have two big players (in Glasgow), Britannic and Abbey. It would be disappointing if one of the two of them didn’t end up being in Glasgow.”
The other senior source familiar with Britannic said: “The opportunity to buy an asset management business on the doorstep like this would be of interest.” This source believed BAM’s existing Glasgow base would be an advantage.
Industry sources said Abbey had not yet issued an information memorandum on ANAM – the document issued to bidders at the start of any auction.
Other potential bidders include HBOS subsidiary Insight Investment, the London-based outfit run by Scot Dougie Ferrans, and possibly Standard Life.
Ferrans headed Scottish Amicable Investment Managers, which was axed by Prudential in 1997. He worked with BAM after it took over SAIM’s third-party funds, before moving to Insight.
Aberdeen Asset Management is not thought likely to be interested in ANAM.
Industry sources expect Abbey will make its decision on whether to sell ANAM this month, but that it might not necessarily announce at that stage that it is embarking on an auction process which could take several months. Morale among staff at ANAM is said to have been hit hard by uncertainty.
Sources said the (pounds) 200m touted as a likely price tag for ANAM seemed reasonable, with one believing the contract to manage funds for Abbey’s Scottish Provident unit was on more lucrative commercial terms than those to run the other life assets. The price any buyer would pay would depend on the length of the contract to run ANAM’s life funds, and on the fee.
Britannic made it through to the final stages of the auction of Edinburgh Fund Managers last year, but was eventually outgunned by Aberdeen Asset Management.
Abbey National has admitted it is looking at “all the options” for ANAM.
A spokeswoman for Abbey yesterday merely referred back to a statement issued last month, which said: “There is a project under way to determine the way forward for our investment activities. That is still under way. It is an extensive project really – covering all the options. The aim is to find the best way for us to meet the needs and expectations of our customers and investors.”
The Herald highlighted back in September serious doubts over the future of ANAM, when it emerged the bank was axing the ambitious Talorcan hedge fund arm. Abbey has also been outsourcing the investment of retail funds sold to its customers.
Abbey’s fund management division was last month fined (pounds) 320,000 by the Financial Services Authority for systems and control breaches.
