LUXEMBOURG (Reuters) - UK fund manager Schroders (SDR.L: Quote, Profile, Research, Stock Buzz) is not interested in buying a rival or in being bought but it is looking for smaller deals, a senior executive told the Reuters Fund Summit on Tuesday.
With asset managers set for at least another year of tough times as nervy investors withdraw funds amid market turmoil triggered by the U.S. subprime meltdown, there is speculation that fallen shares could spur consolidation.
Troubled UK insurer Friends Provident (FP.L: Quote, Profile, Research, Stock Buzz) has already said it is looking at selling its majority stake in F&C Asset Management (FCAM.L: Quote, Profile, Research, Stock Buzz).
But Massimo Tosato, Schroders' executive vice chairman, ruled out making any big acquisitions in comments to the Reuters Funds Summit in Luxembourg.
"We don't believe in transformational deals," Tosato said.
The reason is that big deals involve: "A lot of effort, a lot of blood, a lot of risks," Tosato said.
"At the end you are dealing with people and clients and they are both rather intangible in terms of the strength of a long-term relationship that ties them to a company."
He also poured cold water on persistent market speculation that Schroders itself could be a target, and that the Schroder family, which owns just under half of the firm's voting shares, might sell up.
"It is my view that at this price there is good value" in Schroders' shares, said Tosato, which have underperformed the FTSE 100 index .FTSE.
A recent Landsbanki note said Schroders trades on a 2008 price/earnings ratio of 9.4, a 21 percent discount to the sector.
"There has been a significant decline when you analyze our mix of activities and geographic spread of our activities."
But he firmly ruled out any sale of the firm. "It is absolutely out of the question that there is any possibility of Schroders being acquired in the market. The family is there for the long term, full stop."
SMALL BUYS LIKELY
But Schroders would be interested in making smaller, bolt-on acquisitions, Tosato said.
"We do believe there are areas of scale, presence or expertise where we could reinforce ourselves. So specific, focused small to medium-sized acquisitions are certainly our interest."
"We always look at a lot of things," he said. Continued...
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