AppId is over the quota
AppId is over the quota
By Tommy Wilkes
LONDON | Tue Oct 25, 2011 10:57am BST
LONDON (Reuters) - F&C Asset Management is pinning hopes for future profits on a renewed push for institutional clients, a significant departure from recent efforts to target higher-margin retail flows, the funds firm said on Tuesday.
Edward Bramson, the activist investor who triumphed in a bitter boardroom tussle to become chairman of the manager in February, also plans a slew of redundancies to help the 140-year old company to meet 33.2 million pounds of cost-cutting targets by 2013.
F&C (FCAM.L), which employed 898 full-time staff in March, will shed between 50 and 75 jobs, a source close to the situation said. This comes on top of the 110 job cuts already announced in an outsourcing plan earlier this year.
It is seeking to lay off 65 percent of its IT and back office workforce and more than a third of corporate staff. Some 7 percent of its investment professionals are also expected to leave the company, F&C said in a statement.
F&C shares, which had lost around 30 percent of their value since Bramson took over as chairman, were up 8 percent by 9:52 a.m. as several analysts welcomed news of the efficiency drive, which seeks to deliver three times the savings announced earlier this year.
The focus on institutional business, which serves mainly insurance and pension clients and accounts for around 60 percent of F&C's revenues and 80 percent of its assets, represents a change of focus for the company, which has spent recent years trying to re-position itself towards higher-margin, retail flows.
Insurance and institutional fund clients pulled 1.8 billion pounds out of F&C in the three months to September 30, the company also said on Tuesday.
Assets across the group, meanwhile, fell to 105.8 billion at end-September, down from 108 billion in June.
Exclusivity periods for contracts with several of F&C's biggest institutional clients expire over the next few years, but the low-margin nature could mean there are few competitors when they are up for grabs, analysts said.
"It is far from certain that the company will lose any of these contracts, but the point of the cost savings programmes is that, should it happen, the company could be in a position to mitigate the impact on its business," JP Morgan analysts said in a note.
"Indeed, the modest level of revenues per client may well suggest that other asset managers may not want to compete for the contracts anyway."
Investors will have to wait until next year for a second phase of the review, covering the retail side of the business, including fund of funds house Thames River which F&C bought last year in an acquisition Bramson has openly criticised.
"The focus of today's announcement is our strategy to build on the high quality and competitive strengths of our institutional business," the New York-based investor said in the statement on Tuesday.
The company also aims to pay back all senior debt by 2014, two years earlier than previously planned.
Bramson, apppointed executive chairman earlier this month after Alain Grisay decided to step down from his job as CEO, plans to hand back his executive role as soon as practicable, F&C said, while the company also hired Keith Jones and Keith Percy to the board as independent non-executive directors.
(Editing by Sinead Cruise and Mike Nesbit)
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