Fund manager F&C's fighting talk

By LUCY FARNDON
Updated: 17:52 EST, 6 January 2011

Fund manager F&C Asset Management hit out at the 'alarming' attempt by rebel shareholder Sherborne to take control of the board, warning that the US firm is not fit to be the steward of more than £100billion of investor funds.

F&C's chief executive Alain Grisay said: 'There is a substantial risk that if shareholders endorse Sherborne's approach, the other non-executives would say goodbye.

'Then you would have a minority shareholder taking over the company without paying for it.'

Sherborne, which has built a 17 per cent stake in F&C, has won backing from Aviva Investors, which is a key shareholder in F&C (9 per cent) as well as in Sherborne (20 per cent).

But Grisay says he believes that other major shareholders will support the board. The firm has been forced to call an extraordinary general meeting to allow investors to vote on Sherborne's proposal to throw out F&C chairman Nick MacAndrew and install its founder, Edward Bramson, as chairman.

Grisay said the AIM-listed firm's attempt to take control of the fund manager would contravene best corporate governance and send a 'very, very alarming signal to shareholders'.

He added: 'Do you want the board to hand the keys to a business that manages more than £100billion of other people's money to people who have no experience of managing it?'

Sherborne, who also want to eject F&C's non-executive Brian Larcombe, argues that F&C's share price has underperformed its rivals. But the activist firm is refusing to say what it would like to do if it gets seats on the board.

F&C says all of the firm's key employees and fund managers have pledged to vote against its proposals, pointing out that the firm is getting back on track after having had two years of disruption while former controlling shareholder Friends Provident sold out.

F&C shares rose 2.45p to 88.9p, while Sherborne rose 1.5p to 104.5p.

Because Sherborne now owns more than 10 per cent in F&C, it has triggered a clause that allows F&C's biggest single client to cut its notice period to 12 months from 42 months, which could cost the firm dear. 

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Fund manager Rathbone Brothers (down 4p to 1,090p) said the recovery in equity markets helped boost its assets under management by 19 per cent to £15.6billion during 2010.

The firm, which manages money for wealthy clients, said it can look ahead with 'cautious optimism', so long as the government austerity measures do not lead to a 'double dip' recession.