Sale prospects poor for Gartmore as buyers pull out and stock plummets

Hopes for a quick sale of Gartmore, the troubled fund manager, are fading after a week in which private clients have pulled out millions of pounds and Goldman Sachs has struggled to find a buyer. Goldman has been mandated to conduct a strategic review of Gartmore's operations after star fund manager Roger Guy announced on Monday that he was leaving . A sale is viewed as the most likely option, but Goldman is also looking at ways of keeping the company independent by taking out costs. Guy's departure follows other high profile resignations at the company, including that of Guillaume Rambourg, who resigned in July to clear his name in a Financial Services Authority investigation. Gartmore floated at the end of last year at 220p a share, but the stock has almost halved and closed last night at 114p. One City analyst said: "When things go wrong at fund managers, they go badly wrong, and Gartmore is no exception." Rivals look unlikely to take immediate action: Schroders has ruled out a takeover and Jupiter is reluctant to show its hand. Henderson is also unlikely to make a move in the short term as it is busy integrating New Star, the asset management business formerly run by John Duffield. But it has increased its stake in Gartmore, as have other investors such as Lansdowne Partners, the Mayfair-based hedge fund, which indicates that a sale is still possible. Other potential bidders such as BlackRock and Australian insurer AMP are not in the running, say sources. The City believes a quick sale is necessary if an outflow of funds is to be stopped, but there is concern that some bidders will be put off by the risk of losing business. Analysts at Numis published a note observing "[we] can't think of an obvious bidder willing to pay up". It said the management wanted to find a bidder willing to pay a premium for a business that the City believes is suffering heavy outflows from a £5.5bn fund run by Guy. "The management suggest they want to do this before March 11, ideally much sooner." The Numis analysts also make a point about loss of other staff. "There remains a risk now in our view, with every day that passes and the business is not sold, that other key individuals defect … leaving only those staff not able to get a job elsewhere on merit." A senior City source told the Guardian that private equity buyers had been running the slide rule over Gartmore – which has had five owners in the 40 years since it was created – but that it might be difficult for them to make a convincing case to buy the business unless they already owned a fund management operation that would enable them to cut costs. Gartmore has announced a £10m cost-cutting programme that could lead to job losses: sources said the 350 headcount still appeared high for such a business.