Subject to Financial Services Authority (FSA) approval, F&C will form a new limited partnership, ISIS EP LLP, which will assume control over £500 million of private equity assets as a fully autonomous business. The change will be largely cosmetic, however, as ISIS’ existing team (headed by Wol Kolade) will continue to manage the portfolio from their existing offices in London, Birmingham and Manchester.
F&C chief executive Howard Carter says that the move reflects the imminent introduction of international financial reporting standards (IFRS) and suggests that other asset management groups will soon find themselves having to make similar changes. This is because IFRS obliges all financial institutions with private equity divisions to consolidate the financial reporting practices of each of their investments in line with their own.
‘By effecting a change in control of ownership, whereby the ISIS Equity Partners management team have a controlling stake in the LLP, we have come up with a solution that addresses this issue in a way which benefits all parties,’ Carter explains.
Though Kolade and his colleagues will not pay any consideration in exchange for the private equity business they will continue to manage, they will retain a revenue-sharing agreement with F&C, with the latter also continuing to provide marketing, distribution and secretarial services to the former.