Jupiter Asset Management, the UK fund management firm being sold by owner Commerzbank, has failed to attract any substantive offers prior to the original June 21 auction deadline. With the asset management industry in a depressed state at present, where many firms are wrestling with poor fund performance as a result of the slump in public equity markets, it is unsurprising that few buyers have stepped forward. Institutions including Swiss bank UBS and US fund manager Franklin Templeton have declined to meet Commerzbank’s £500m asking price.
As a result, Goldman Sachs, the bank appointed to oversee the sale, has held talks with a number of US private equity firms over the sale of the business. The Daily Telegraph reports that the investment bank has now contacted US private equity firms Kohlberg Kravis Roberts and Texas Pacific, with analysts predicting that the recent collapse of the public markets could now produce a winning bid below the £400m mark.
The auction process is complicated by Commerzbank’s refusal to sell the business to founder and former chairman of Jupiter John Duffield, currently in charge of Star Asset Management. Star had offered to pay £100m more than any credible rival bid, although the offer was rejected out of hand by Commerzbank. Duffield left Jupiter after a bitter dispute with the German bank over the amount Commerzbank was obliged would pay for the final 25 per cent of Jupiter, for which it had agreed a near-£1bn price tag in 1995.
It is thought that private equity backers may now join in a bid with Jupiter's chief executive Edward Bonham-Carter who is considering a buyout of the company. There has been considerable debate recently about private equity firms' participation in the financial services sector: with some wondering whether private equity firms are equipped to add value to the often sizeable and mature companies in this sector. Others remark on several private equity firms' aspirations to grow into major alternative asset managers – with companies such as The Carlyle Group making it clear that they see this as being a logical step in their development – as well as an integral part of the ongoing institutionalisation of the asset class.