NatWest shares closed up 6p at 674p yesterday.Comment, page 17. News that Rupert Murdoch’s daughter, Elisabeth, is to join BSkyB as a senior manager will further fuel speculation about Mr Murdoch’s succession plans, media analysts predicted last night. NatWest re-entered the arena and clinched the deal at a lower price within three weeks.The distribution joint-venture between Gartmore and Nationsbank of the US is to continue, giving the new fund management group, with NatWest’s customer base added as well, a retail distribution potential of 15 million.NatWest is to embark on an investment programme worth several millions of pounds – Project Dolphin – to strengthen its distribution technology and capacity, to take advantage of the Gartmore acquisition. NatWest had also shown initial interest, but all had baulked at the high prices being talked about. Talks stalled and Phoenix Securities, handling the sale, had to issue an announcement last month that Indosuez still wanted a buyer. “I am delighted this has been a UK purchaser – the advantages to both sides are that much greater,” he said.There had been strong foreign interest in Gartmore in the early months of the sale, notably from Berliner Bank of Germany and Aegon, the Dutch insurer.

Mainly for this reason, he had been keen for Gartmore, 85 per cent of whose clients are UK-based, to be sold to a British parent. “This really will be the most powerful linkage between an investment management organisation and a retail distribution network in Britain,” said Mr Myners. Pressure on state budgets and the trend towards encouraging private individuals to save and provide more for their own retirement, health and care needs, combined with a steadily ageing population, offer considerable growth prospects for the fund management industry.The deal brings NatWest’s large customer base and distribution potential together with Gartmore’s strong brand name and well-regarded expertise in fund management. The price works out at 1.9 per cent of funds under management or about 20 times Gartmore’s historic earnings. Gartmore yesterday reported flat 1995 pre-tax profits at pounds 35.5m.The purchase reflects NatWest’s targeting of long-term savings as a market with enormous potential. “This is an important strategic move for us in that it enables us to build our asset management and retail distribution skills,” said Derek Wanless, chief executive of NatWest Group.

Mr Myners is expected to make a pounds 400,000 profit on the exercise of his 584,000 options.”NatWest has pulled off this deal at a pretty reasonable price, given the potential for growth and savings it offers,” said Tony Cummings, an analyst at SBC Warburg. Gartmore’s expertise in active fund management complements NatWest ’s specialisation in passive or index-tracking fund management. Paul Whitney, the head of NatWest Asset Managers, has resigned immediately with an undisclosed pay-off. The seven directors of Gartmore are to make pounds 2m between them on share options triggered by the sale. The pounds 472m purchase price is well below the pounds 600m value Gartmore’s French parent, Banque Indosuez, had hoped for when it put the fund manager into play last September.The agreed sale, which will create the fourth biggest non-life investment manager in the UK, with combined funds under management of over pounds 55bn, marks an important step in NatWest Group’s strategy of expansion in key areas.Paul Myners, Gartmore’s chief executive, along with his top officers, will take over the main posts of the combined operation. At the meeting there was no request whatsoever on behalf of the major firms for Mr Lawrence’s dismissal.”.

JOHN EISENHAMMER

Financial Editor
NatWest Group propelled itself into the fund management big league yesterday with the acquisition of Gartmore. The issue of the possible change in market structure was only one of those concerns in the sense that they felt they were not being fully informed in the debate. I believe that the exchange has to change with the rest of the world.”Mr Kemp-Welch said: “I have asked the two deputy chairmen to conduct an exercise over three months that will look at the exchange’s governance.”He dismissed suggestions that his former chief executive had been sabotaged by the interests of the City’s larger and dominant investment banks, which opposed his changes to the trading system.Mr Kemp-Welch said: “I do not wish for a moment to dismiss the seriousness of the chief executive’s dismissal.” He went on: “I had a meeting with two representatives of the major firms in December They expressed their concern. “What I hope to bring is an independent perspective from the Bank of England’s viewpoint …

One of those deputy chairmen, Mr Plenderleith, agreed that the exchange’s decision-making process needed reviewing.Mr Plenderlieth, who is also a Bank of England executive, has been asked to fulfill some of the functions of a chief executive until a replacement for Mr Lawrence has been chosen He will be doing so on a non-executive basis. It keeps us on our toes, but we firmly believe in the central market place. Fragmentation is not desirable.”Mr Kemp-Welch revealed during the session that he had asked his two deputy chairmen to conduct a review of the exchange’s corporate governance in the wake of the recent sacking of Mr Lawrence. I wouldn’t wish this committee to feel there’s any complacency in the desire to drive down costs as far as we reasonably can.”Mr Davies pointed out that the 1,100 staff at the exchange could be compared with the 1,400 people currently employed at the exchange’s counterpart in New York where turnover, he said, was seven to eight times greater.Mr Davies said: “What concerns me is that the London Stock Exchange has seen that some of its functions have been hived off but that in your organisation and ambitions you have not reflected that fact.”Mr Kemp-Welch hit back at suggestions that the exchange was either facing a crisis of identity or that it was not willing to accept competition from other quarters.Asked by Mr Davies if it was undesirable for there to be other securities markets operating in the UK Mr Kemp-Welch replied: “No We welcome competition. “I can assure you that the process is going to continue and wherever we can we will institute changes to improve efficiency to reduce costs.