F&C management today told analysts they were “indifferent” when it came to a choice between a management buyout and a merger with a rival fund management group. In a conference call to reporters, CEO Alain Grisay refused to rule out an MBO saying that F&C would look at “all options”. But what are its options? In the current market, the asset manager may find it well-nigh impossible to raise the necessary funds to engineer a management buyout of the firm. Private equity deals like those seen at Gartmore last year where TA Associates and Hellman & Friedman picked up stakes are a possibility. But that too is seen as unlikely given the drying up of big private equity deals thanks to the recent credit crunch. Potential suitors are also likely to be deterred by the hefty price they will have to pay up for the group– with a price earnings ratio of 20 times, compared to the sector which is currently at 12 times- F&C is trading a massive premium.As Samir Shah, an analyst at Landsbanki, puts it: “The price is so high compared to its peers that it would be very difficult to get appropriate synergies at the moment.” So the only real options the group may have are to be sold at lower levels or wait for markets to return to normality.

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