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Hedge funds stock up on Amvescap, eye a play

Date: Friday, July 8, 2005
Author: KEITH DAMSELL www.globefund.com


Hedge funds have gobbled up a significant stake in Amvescap PLC and are intent on pressuring management to auction the British mutual fund company to the highest bidder.

"Sell the company," said one U.S. hedge fund manager, whose firm owns about eight million Amvescap shares, about 1 per cent of the total outstanding. The manager wants to meet with Amvescap and urge the firm to initiate a sale process.

On Wednesday, Amvescap's board of directors dismissed an offer from CI Fund Management Inc. of Toronto to buy the fund company for a reported $7-billion in cash. Amvescap has about $461-billion in mutual fund assets under management around the world, including $44-billion at Toronto's AIM Funds Management Inc.

CI, manager of about $46-billion in mutual fund assets, has not ruled out a hostile takeover offer.

"It's a real possibility . . . a serious option," CI president and chief executive officer Bill Holland said. Despite doubts from Amvescap, CI insists it has the financial backing to buy the larger fund company and has the support of minority shareholder Sun Life Financial Inc.

Amvescap's shares have soared 18 per cent this week on the London Stock Exchange. They were up 13 pence to 4.08 ($8.75) yesterday, one of the rare stocks to gain following the terrorist attacks in London.

Hedge funds have been heavy buyers, several sources said. It is estimated that as many as 20 hedge funds now control 10 to 12 per cent of Amvescap's shares.