Gartmore’s £1bn float to kick start surge in IPO

The listing, reckoned to value Gartmore at up to £1 billion, is the first sign that after a bullish trading rally over the past few months, the London stock market could be ready to start functioning fully again and welcome a slew of initial public offerings.

The Gartmore float is expected in the week before Christmas. It will crystalise millions for the top brass of the Fenchurch Street-based fund manager — led by ex-Bear Stearns and Lehmans banker Jeffrey Meyer — and make its star, the 42-year-old hedge fund manager Roger Guy one of the richest men in the City.

The float will also bag millions more for City advisers queuing up to ride the flotation gravy rain. Gartmore's bankers and brokers on the float are Bank of America Merrill Lynch, Morgan Stanley, UBS, Citibank and Fox-Pitt, Kelton.

With nearly £22 billion under its control, Gartmore is one of the best-known names in City investment management and was for many years headed by Paul Myners, now Labour's City minister Lord Myners.

It is reckoned that around 30 current and former bosses who own 42% of Gartmore's shares could be cashing in stock worth tens of millions of pounds at flotation. They will continue to have significant holdings in the floated company albeit most of the holdings will be locked in until 2013.

The float has been called by Gartmore's private equity owners, the San Francisco firm Hellman & Friedman who will be looking to cash in and sell down its 58% controlling stake.

It is believed Gartmore is aiming to raise more than £300 million in new money to pay down debt.

Gartmore was run by Myners when it was part of NatWest up to the turn of the century. Hellman & Friedman bought Gartmore for £550 million in 2006 from the US financial services group Nationwide Mutual. Nationwide itself had paid more than £1 billion for Gartmore in 2000 when it bought the business from Royal Bank of Scotland after its acquisition of NatWest.

In a statement to the Stock Exchange declaring its intention to float Gartmore said it was floating "to enhance the company's profile and status with existing and potential clients."
Meyer said: "We are being opportunistic. We see a long queue of companies wanting to float in the first and second quarters of next year and thought Why not be first and avoid getting stuck in the queue?'"

In the first nine months of the year Gartmore made operating profits of £38 million on revenues of £207 million. "We believe that a stock market listing now is the logical next step in Gartmore's development," added Meyer.

"It will raise the profile of the group and provide benefits for our clients, shareholders and current and prospective employees."