FTAdviser.com

Advertising

Andrew Williams said the company would finance the transaction using equity rather than debt, but he could not give details on potential takeover targets.

He said UK retail management firms had reached attractively low valuations as a result of the turmoil of the past year. Organic growth through fund launches, he added, looked more challenging in the current environment than inorganic growth through mergers and acquisitions.

The move follows Fitch Ratings research earlier this month that concluded large institutions and smaller companies would consolidate.

According to Fitch, multi-boutique structures will eventually emerge as asset managers’ corporate models of choice, and firms will benefit from economies of scale while employing specialised, distinctive investment teams.

Mr Williams said the transaction was in line with the agency's findings.

"Our investment and corporate theses concur with the Fitch report," he said.

Because Mr Williams outsources the running of the firm’s six funds to three separate external managers, he already classed City Financial as a multi-boutique in its own right.

He said pure boutiques may also forge joint ventures with large asset managers to gain distribution status and scale rather than getting bought out.

Over its 21-month history, City Financial has accumulated £141.5m under management after three purchases by its owners, Mr Williams and Rob Hain, who served together as senior employees at Invesco Perpetual.

The partners bought fund manager City Financial Investment Company and the UK retail fund division of Foresters in 2006. They then added the UK retail fund of funds business of Neptune Investment Management in 2007.

Mr Williams revealed he has been focusing the firm's product development on the UK retirement market, which is due to see strong uptake in the UK as the babyboomer generation retires. For his part, he said he had put his entire pension plan into City Financial's own funds.

The range features ultra-safe government bonds in the Strategic Global Bond and Strategic Gilt funds, domestic and global stocks in the UK Select Alpha and MultiManager Growth funds, income-generating holdings in the MultiManager Income fund and steady return streams in the Diversified Absolute Return fund.