Jupiter dives into brittle IPO market

Jupiter Asset Management chief executive Edward Bonham-Carter pictured in a file photo.

LONDON (Reuters) - Fund manager Jupiter will test investors' appetite with a London listing next month likely to value the firm at around 800 million pounds, seeking to cut debt and allow staff to cash in existing shares.

Jupiter will start a roadshow Wednesday and is expected to issue a prospectus at the end of the month or early June which will reveal the existing holdings of top staff, a source said.

The firm -- led by chief executive Edward Bonham Carter, brother of British actress Helena -- also hopes a public listing will help it attract and retain top fund managers.

Jupiter said on Tuesday the sale of new shares will bring in about 220 million pounds. The sum raised from new shares will be used to pay off debt owed to banks and to private equity backer TA Associates, which owns a 20 percent stake. Directors, fund managers and other staff will also sell shares.

Staff, who own about 80 percent of the firm, will be limited to selling 20 percent of their holdings.

Some 93 percent of the staff are shareholders.

Recent attempts at IPOs in Europe have met with a frosty reception as investors face an uncertain market backdrop.

Rival British asset manager Gartmore struggled to get away its own IPO in December, but Jupiter may be less burdened than Gartmore by the so-called "key man risk", or concern it was too dependent on a small number of star managers.

HIGH PROFILE

Jupiter's most high-profile fund in recent years has been Philip Gibbs' Financial Opportunities fund, but the firm has brought in star manager Guy de Blonay from rival Henderson. The company also has large funds managed by Tony Nutt and John Chatfeild-Roberts.

"Jupiter is a high profile name -- it has had a strong, long-term record of growth for quite a number of years. Well run asset management businesses should be strongly cash generative, so people should be interested, depending on the price at which it is brought to market," said one analyst.

Jupiter was founded by John Duffield in the mid-1980s and later sold to Commerzbank. It was bought by its management with the backing of TA Associates in 2007.

Although analysts were awaiting the prospectus to build a full valuation, the market uses assets under management as a rough guide. That can mean up to 5 percent for firms with a lot of high margin or hedge fund style business, and down to 1.5 percent for pure long-only houses.

A second analyst said Jupiter -- which has the bulk of its 21.1 billion pounds of assets in long-only, mainstream funds -- would likely take a valuation of between 2 and 4 percent of assets, giving a top end target of just over 800 million pounds.

In 2007, the management buyout with TA had valued the group at 740 million pounds. Sources with knowledge of the IPO said TA would remain invested in Jupiter.

"There's more goodwill in the City towards Jupiter. They've been pretty clean and steady-as-she-goes," added the second financial sector analyst.

In an industry where clients are more prone than ever to jump ship when performance dives, Jupiter's funds have held up. According to data from fund research firm Lipper -- part of Thomson Reuters Corp -- funds with more than 100 million pounds in assets have outperformed their rivals by an average of 3.24 percentage points over the year to the end of April.

The top outperformers over that period have been the Strategic Bond fund managed by Ariel Bezalel and the China fund managed by Philip Ehrman.

Lexicon is acting as financial adviser on the deal alongside JP Morgan, which is also acting as joint bookrunner with Bank of America Merrill Lynch.

(Additional reporting by Joel Dimmock, Alex Chambers and Raji Menon; Editing by David Holmes and Elaine Hardcastle)