Final price for UBIM expected to top £100m

With up to 10 indicative bids likely to have been lodged by this Friday's deadline, market sources believe the final price for Ulster Bank Investment Managers may comfortably exceed £100 million (€113.9 million).

It is expected that indicative bids will be lodged by at least two, possibly three, international groups which are not already involved in the Irish investment management industry.

Such interest is likely to be favoured by UBIM's management, which sees a link-up with an international fund management group opening up greater opportunities than if UBIM was simply absorbed into an existing Irish institution's fund management operations.

It is understood that the indicative bids will be whittled down to a final shortlist of three or four bidders, who will then be asked to lodge detailed formal bids for UBIM. A final decision is likely by the end of the quarter.

With €7.4 billion (£5.8 billion) under management and a host of blue-chip pension fund and institutional clients, UBIM is seen as a hugely attractive business - especially for an outside institution keen to grab an immediate market share of the booming Irish fund management industry.

"An outside bidder would probably be prepared to bid more than an existing Irish fund manager simply to get a quick entry to the market through UBIM," said one market source.

None of the major Irish institutions has either confirmed or ruled itself out as a bidder but likely contenders are Irish Life & Permanent (also interested in Ulster Bank itself), Norwich Union, Friends First and CGU.

The information memorandum issued to potential bidders suggested UBIM was likely to make profits of around €5.8 million this year, compared with €3.5 million last year.

That memorandum showed that of the €7 billion under management at the end of October, almost two-thirds was invested in equities, with 22 per cent in bonds, almost 5 per cent in property and the balance held in cash.

The equity portfolio was split 27 per cent in Ireland, 22 per cent in the UK, 21 per cent in Europe, 20 per cent in the US with the balance in the Far East.

UBIM has 235 pension fund clients and 33 institutional clients including blue-chip clients such as RTE, Glanbia, CRH, Compaq and Unilever.

The memorandum said UBIM had been very successful in attracting new business - new institutional mandates last year totalled €400 million.

UBIM's pension managed fund was the top-performing group pensions managed fund over the last 10 years, according to consultants Mercer.

The fund had an annualised return of 15.3 per cent against an average of 13.3 per cent.