Schroders reports £4.2 billion outflows ahead of sale to Nuveen

By Iain Withers

LONDON, July 30 (Reuters) - Money manager Schroders reported deeper net outflows of £4.2 billion ($5.6 billion) for the first half of the year on Thursday, ahead of the expected completion in coming months of its £9.9 billion ($13.2 billion) sale to U.S. rival Nuveen.

The British company's shareholders – including the 222-year-old firm's founding family – have already backed the transaction, which has fueled market speculation about the prospect of further deals in the fast-consolidating investment industry.

Schroders said an unnamed "low-margin" client pulled out £6.6 billion during the period, while the firm's CEO Richard Oldfield told Reuters some big clients had also hit "pause" on long-term commitments in its solutions and private-markets units.

"If you're a product that locks clients' money up for more than 10 years ... you want to pause and actually make sure that the investment proposition isn't impacted, and we keep telling clients that's not going to happen," Oldfield said.

The company pulled in £69.3 billion of gross inflows, up about £1 billion on the prior year, which Oldfield said showed "great client confidence" overall in the deal.

Schroders' adjusted operating profit for the first half jumped 46% to £459.8 million, while its total assets under management grew to a record £867.8 billion.

WEALTH TAX WARNING

Oldfield said he planned to stay on at Schroders after the deal completed, with Nuveen stating in deal documents it plans to run Schroders as a standalone business with its existing executive directors for at least a year.

"My job here is to make sure that we make this transaction a success," he said. "I'm sticking around ... for as long as everyone wants me here."

Oldfield warned against the UK government led by new Prime Minister Andy Burnham implementing higher wealth or capital gains taxes to shore up strained public finances, adding this would deter investment.

"If you're trying to encourage people to invest in the United Kingdom ... you do not do that by imposing a wealth tax on those individuals," he said.

($1 = 0.7491 pounds)

(Reporting by Iain Withers, Editing by Louise Heavens and David Holmes)