F&C stock slides as Dawnay Day is seen cashing out
F&C Asset Management stock slid 29% yesterday after traders said its second-largest shareholder, stockbrokers Dawnay Day, had sharply reduced its holding through a share placing.
Dow Jones Newswires reports that Dawnay Day declined to comment, but a placing of 94 million shares by Kaupthing Bank was widely thought to have been initiated on behalf of the London-based investment firm.
The shares were placed on a bookbuild basis at 105 pence to 115 pence each, according to traders. At 09:06 GMT this morning the shares were trading at 97p, having fallen 29% yesterday.
Dawnay Day had accrued a 26.4% exposure to F&C over the past 17 months, mainly through contracts for differences. When it first disclosed a 14.2% stake in August, the stock was trading at 190 pence.
Part of the holding was held on behalf of Berggruen Holdings Ltd., an investment vehicle of the Berggruen family. According to a regulatory filing this morning, Berggruen has now terminated its co-investment arrangement with Dawnay Day, and has maintained a 2% shareholding in F&C, together with a further economic exposure of 5% through derivatives.
Dawnay Day started building its stake in February 2007 because it thought the company looked undervalued. But a series of setbacks for F&C, including further investor redemptions and a lack of interest in the 52% stake that majority owner Friends Provident PLC put up for sale in January, has resulted in a 44% decline in F&C's share price this year.
"A buyer confident of being able to strip more out of F&C's cost base may take a look at these levels, but Friends Provident's pricing power is not helped by appearing to be a forced seller," Landsbanki analyst Katrina Preston said in a note.
She downgraded her earning-per-share estimates for F&C this year to 8.9 pence, from 9.5 pence, and kept a reduce rating.
A Friends Provident spokesman said the firm would update the market about the sale of its stake in F&C "in the third or fourth quarter".
F&C wasn't immediately available to comment.
As of Friday, Dawnay Day held a stake representing 129.9 million F&C shares. It had added to the holding that day by buying CFDs on 310,166 shares at 143.88 pence apiece.
Write to mcobley@efinancialnews.com
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