F&C Asset Management yesterday warned it is losing business while Friends Provident mulls how to dispose of its 52% stake and said it is preparing to cut jobs across its operations.
F&C Asset Management yesterday warned it is losing business while Friends Provident mulls how to dispose of its 52% stake and said it is preparing to cut jobs across its operations.
The fund manager yesterday reported that a 119% surge in performance fees to £20.8m helped it to beat analysts' expectations with 2007 pre-tax profits of £25.09m compared to a £30.5m loss in 2006.
On an underlying basis, which excludes compensation payments from some institutional investors and some one-off costs, profits were down 12% at £77.3m.
F&C had already disclosed a 0.5% fall in assets under management to £103.9bn, with net outflows of £9bn largely driven by the loss of some Dutch mandates and the decision of Cambridge University to run its own funds.
However, chief executive Alain Grisay warned that the uncertainty over the future of the company was hindering its ability to attract new institutional investors, particularly from UK clients. It reported improving in-flows from private investors.
Majority shareholder Friends Provident has announced it is exiting the wealth management space and is in discussions with F&C about the future of the company.
Grisay, who has hired his own advisers including investment bank Lazard and corporate advisory company Lexicon Partners,which supported Jupiter Asset Management in its management buy-out last summer, maintained that all options, which include an MBO or a private equity bid, remained "on the table".
But he indicated he wanted the situation resolved quickly.
"It is not a firesale, he said. "But obviously we have a vested interest to resolve it as soon as possible."
To add to its woes, F&C said yesterday that the move could trigger "change of control" clauses prompting investors to exit, although Friends Provident has pledged to continue using F&C to run its money.
Of more immediate concern to staff will be a signal from the company that it is seeking job cuts in the short term.
F&C has introduced a new dealing system to support investment performance and moved much of the administration work previously undertaken by Mellon in-house.
This, the company said, led it to "anticipate a reduction in head count".
Chief financial officer David Logan would not be drawn on the scale or location of job cuts, and reaffirmed the company's commitment to its Edinburgh office, where 130 people are employed in administration and fund management.
However, he indicated that it would not be immune to any redundancies."I think if you create efficiencies some of these arise across the business as a whole."
F&C shares closed up 0.75p at 175.5p.
