Source: Gartmore IPO Is Fully Covered

LONDON (Reuters) – The initial public offering of fund manager Gartmore is fully covered, a source close to the firm said, raising the prospect of Europe’s first successful private equity-backed IPO since the credit crunch.

The flotation of Gartmore, 58 percent owned by San Francisco-based Hellman & Friedman (H&F), could raise around 400 million pounds ($658 million) via the sale of up to 160 million shares for between 250 pence and 330p.

Final pricing is due on Thursday as Gartmore looks to buck the trend of relatively weak demand for IPOs in Europe this year. As recently as last week Hochtief Concessions, a unit of German builder Hochtief AG (HOTG.DE), pulled its IPO, though Belgian drugmaker Movetis NV (NYR.BR) succeeded in an IPO which raised an initial 85 million euros ($126.5 million). 

Listings in Milan and Paris of online fashion retailer Yoox (YOOX.MI) and PPR (PRTP.PA) unit CFAO (CFAO.PA) also proved successful, though activity in Europe has been flat by comparison with elsewhere in the world and flotations by private equity firms such as H&F have so far been few and far between. 

The Gartmore offer comprises the sale of 41.4 million shares by H&F and Gartmore’s management and staff for up to 136 million pounds, and the sale of 96.6 million new shares, raising up to 318 million pounds that the group will use to pay off debts.

The offer is fully underwritten and Gartmore expects to incur fees amounting to around 15 million pounds ($24.7 million), according to the offer prospectus.

INVESTOR ROADSHOW

H&F is selling 24 percent of its stake, targeting around 69 million pounds at the mid-range, while Gartmore’s management is selling 22 percent of its shares for around 51 million pounds, a source close to the company said on Monday.

One banking source told Reuters demand so far is split evenly between UK and U.S. investors with a number of continental European funds also on the book.

The other source said Gartmore’s management is promoting the sale on a roadshow involving meetings with investors in London, New York, Boston, Edinburgh and Frankfurt.

One fund manager with knowledge of the Gartmore IPO said: “The pricing was set at quite a wide range — most people trying to get into the book have been doing so at the bottom level.

“I think it will probably get fully covered, but it’s a question of whether they are prepared to sell at the price it gets fully covered at.”

Gartmore said last week the offer was more than 50 percent covered, prompting a number of UK long-only funds to request meetings with management, the banking source said.

Joint global co-ordinators for the offer are Bank of America Merrill Lynch (BAC.N), Morgan Stanley (MS.N) and UBS (UBSN.VX).

By Chris Vellacott
(Additional reporting by Raji Menon; Editing by Jon Loades-Carter and David Holmes) ($1=.6080 Pound) ($1=.6720 Euro)