Gartmore and Hermes enter agreement to merge private equity businesses

UK fund manager Gartmore has entered into an agreement with fellow UK asset management business Hermes to merge its private equity business and the private equity business of Hermes into a new joint venture. The combined fund-of-funds business would have approximately £3.4bn assets under management.

This agreement is still conditional and there is no guarantee that the proposed joint venture will be established, according to Gartmore’s IPO prospectus. Neither parties were willing to comment on the deal.

Private equity-owned fund manager Gartmore last week priced its initial public offering at 220 pence per share valuing the company at £676m. Backed by US firm Hellman & Friedman, Gartmore was bought out by management in 2006.

Gartmore Private Equity (GPE) is the private equity division of Gartmore Investment Management. GPE manages pooled fund-of-funds vehicles and segregated mandates on behalf of institutional investment clients. The group has been investing in private equity since 1991 and currently has €2bn of assets under management. 1991

Hermes Private Equity, the private equity business of institutional fund manager Hermes has been investing globally in primary partnerships since the 1990s and has over £1.7bn assets under management in private equity funds as at 30 September 2009. Since 2004, fund investments have been made through annual partnerships. Each annual fund commits up to £400m in between 12 to 20 primary partnerships, and is diversified by geography, year and sub asset class.

Hermes Private Equity is owned by Hermes Fund Managers, one of the largest institutional fund managers in the UK with over £30bn under management. Hermes Fund Managers is owned by its largest investor, the BT Pension Scheme.