UPDATE: Gartmore Group Plans IPO On London's Main Market

U.K. fund manager Gartmore Group Ltd. said Friday that it plans to list on the London Stock Exchange, heading a widely expected wave of initial public offerings of businesses owned by private equity companies.

Chief Executive Officer Jeffrey Meyer, on a conference call, wouldn't say how much the IPO is expected to raise, but previous reports have put the figure at around GBP500 million.

Gartmore said proceeds from the listing will be used to reduce its net debt to GBP150 million and Meyer said net debt was around GBP400 million at Sept, 30.

The traditional equity and alternative asset management firm has GBP21.8 billion of assets under management and U.S. private equity firm Hellman & Friedman has just over a 50% stake.

Meyer wouldn't say how much of this stake, if any, Hellman & Friedman planned to retain following the IPO, but said the primary reason behind the move is to cut the group's debt levels, not to create an opportunity for Hellman & Friedman to exit their stake.

"If there's an opportunity to reduce some of their stake, as well as for the employees who own the balance to reduce some of their stake, I'm sure that will be considered," Meyer said, but he stressed it wasn't the main reason behind the IPO.

Still, the debt issues aren't pressing. Gartmore's "covenant light," or less-stringent, financing is only due in 2014 and there are no financial covenant tests that have to be passed.

But Meyer said the company was acting conservatively. "Frankly, we don't need leverage except for the purposes of the buyout, and we felt it was an opportune time in the market to delever. Even though [the debt is only due] several years out, it seemed the prudent thing to do," Meyer said.

He also confirmed that Hellman & Friedman currently have two seats on the board and would maintain those two seats after the IPO.

Hellman & Friedman backed a management buyout of Gartmore in May 2006 from Nationwide Mutual Insurance Co., which kept the U.S. side of the business. The deal was valued at less than the GBP500 million to GBP600 million wanted by Nationwide, according to people close to the matter.

The balance of the company is held by fund managers and executives of the company.

Meyer said: "We believe that a stock market listing now is the logical next step in Gartmore's development. It will raise the profile of the group and provide benefits for our clients, shareholders and current and prospective employees. The fundamental prospects for our business are attractive and we have a clear strategy in place to deliver further growth."

The company said its net inflow of assets under management was GBP924 million in the third quarter. Revenue was GBP207.1 million and operating earnings were GBP38.1 million for the nine months ended September.

The IPO is expected to close in mid-December.

BofA Merrill Lynch, Morgan Stanley and UBS Investment Bank are joint global co-ordinators, joint bookrunners and joint sponsors in the offer. Citi is acting as joint bookrunner and Fox-Pitt, Kelton is acting as co-lead manager.

-By Digby Larner, Dow Jones Newswires; +33 1 4017 1748; digby.larner@dowjones.com

(Marietta Cauchi contributed to this article.)