Gartmore, Hermes To Merge PE Businesses

Two London-based private equity fund-of-funds managers intend to unite their shops in a new joint venture.

Gartmore Private Equity, a division of Gartmore Investment Management, has agreed to merge with Hermes Private Equity. The combined business will have about £3.4 billion ($5.5 billion) of assets under management.

The agreement is conditional, with no guarantee that the deal will actually take place, according to Gartmore’s IPO prospectus. Neither firm would comment on the joint venture.

Private equity-owned Gartmore recently priced its IPO at 220 pence per share, valuing the company at £676 million. Backed by buyout shop Hellman & Friedman, Gartmore was bought out by its management in 2006.

Gartmore Private Equity manages funds-of-funds vehicles and separate accounts on behalf of institutional clients. The group has been investing in private equity since 1991 and has €2 billion ($2.9 billion) of assets under management.

Hermes Private Equity has been investing since the 1990s and has more than £1.7 billion of assets under management in private equity funds, as of September 2009. Since 2004, fund investments have been made through annual partnerships. Each annual fund commits up to £400 million in 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 U.K.’s largest institutional managers, with more than £30 billion under management. Hermes Fund Managers is owned by its largest investor, the BT Pension Scheme.