F&C on offensive to win over shareholders in boardroom battle

EMBATTLED fund manager F&C is gearing up for a campaign in the coming weeks to convince non-aligned shareholders in its boardroom battle with activist shareholders that its strategy is "on the right foot" and should not be abandoned.

F&C believes it has the ammunition to prove to investors that it has reversed years of trading under-performance, and that there will be enough wavering institutions to vote down the rebels.

Battle lines have hardened ahead of a shareholder EGM, expected in early February, that was requested by Edward Bramson's Sherborne investment vehicle on Thursday.

Sherborne has built a 17.5 per cent stake in F&C in the past six months, with Bramson wanting to install himself as chairman by removing Nick MacAndrew.

Bramson also wants to replace F&C non-executive director Brian Larcombe with Ian Brindle, chairman of Sherborne, who was previously UK chairman of accountancy giant PwC.

Institutional investors in F&C, meanwhile, including Legal & General, Scottish Widows and Dutch financial services group Eureko, the latter holding 10 per cent of the fund manager, are keen to hear what both sides have to say.

One institutional investor in F&C, one of the UK's oldest fund managers, said: "Currently the activist group have not shown a compelling strategy to enhance value. Similarly, neither has the incumbent board. However, we await further plans."

Sherborne, which declined to comment, is backed by Aviva Investors, F&C's third biggest shareholder, with 6.35 per cent.

David Lis, head of UK equities at Aviva, said on Friday that Bramson had a "demonstrable track record of delivering shareholder value, most recently at Elementis (the speciality chemicals group] and Spirent (electronic control systems], and we believe he can do the same again at F&C".

However, one source familiar with the situation said: "These guys (Sherborne] are trying to gain creeping control of the company. F&C has been plagued by shareholder instability in the past but have got on the front foot since they effectively became independent in the summer of 2009."

F&C was 52 per cent owned by insurer Friends Provident, which said it wanted to exit the fund manager at the start of 2008. F&C only became independent in the summer of 2009, however, after Friends Provident was taken over by Clive Cowdery's Resolution consolidation vehicle.

F&C is known to take heart in the coming battle for shareholder minds that its investors backed its 52 million acquisition of Thames River Capital in September that took the group into higher fee areas such as absolute mutual funds.

In addition, after years of net outflows of funds, F&C points out that the performance has improved sharply in recent times.