A New York-listed asset management giant is weighing a bid for Hermes Fund Managers, the investment house owned by Britain’s biggest corporate retirement scheme.
Sky News has learnt that Federated Investors, which manages almost $364bn on behalf of clients, is among a pack of suitors for Hermes, which is owned by the BT Pension Scheme.
Sources said on Wednesday that talks between potential buyers of Hermes, which manages more than £28bn in assets, and its current owners have been under way for several months.
The Australian fund manager Challenger, US-based Old Mutual Asset Management and Eaton Vance are also said to have expressed an interest in Hermes at various stages of the process, although it was unclear whether any of them remain involved.
Saker Nusseibeh, the chief executive of Hermes Fund Managers, is thought to be playing a leading role in the discussions.
Fenchurch Advisory Partners is acting for the Hermes management team, according to a source close to one of the bidders.
If concluded, the sale of part or all of Hermes would be the latest in a string of deals reshaping the UK’s asset management sector.
So far this year, Henderson Global Investors and US rival Janus have merged to form Janus Henderson, while Aberdeen Standard Investors was created from an £11bn tie-up between Aberdeen Asset Management and Standard Life.
Richard Buxton, one of the City’s leading fund managers, is involved in a potential management buyout of part of Old Mutual Global Investors, another high-profile deal.
The flurry of merger activity comes amid pressure on the active management side of the industry, with investors increasingly shifting their capital to cheaper passive funds.
Any deal would mark a watershed moment for Hermes, which was established by BT nearly 25 years ago to manage the telecoms group’s retirement funds.
Sources said that the BT Pension Scheme, which is being advised by PricewaterhouseCoopers, could opt to retain a stake in Hermes as part of any deal.
The scheme remains a client of Hermes, although BT’s pension fund withdrew an £8.4bn government-bond mandate from the asset manager in 2015 in an attempt to cut costs.
The details of a transaction, including the size of a stake in Hermes that would be sold to a third party, have yet to be finalised and sources said on Wednesday that it was possible that no agreement would be struck.
Any deal is unlikely to be announced until well into the new year, they added.
In addition to the money it manages for its own institutional and retail investors, Hermes assists hundreds of clients with their engagement on investments worth more than £260bn.
It has also diversified into infrastructure investments, snapping up a stake in Eurostar when it was sold by the Government in 2015.
According to its latest annual report, Hermes made an underlying pre-tax profit of £15.5m on turnover of £104m.
A full or partial sale is expected to value Hermes at a multiple of several times its annual turnover, according to analysts.
Mr Nusseibeh has become an increasingly important figure in the City in recent years, taking an active stance on issues of governance, stewardship and broader corporate responsibility.
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He is a director of the Banking Standards Board and is a former chair of The 300 Club, a group of investment professionals set up to interrogate the prospects for the asset management sector.
A Hermes spokeswoman said it would not comment on “rumour and speculation”, while Federated also declined to comment.