Business Analysis: Horlick back to haunt her German nemesis

Eight years after Frankfurt showdown, supermum may bid for Deutsche's UK fund arm

Nicola Horlick, superwoman, supermum and star fund manager, is back in the limelight. The woman who has been a role model for a generation of ambitious female professionals is considering a bid for Deutsche Bank's UK fund management arm in a move that resonates with delicious ironies.

Nicola Horlick, superwoman, supermum and star fund manager, is back in the limelight. The woman who has been a role model for a generation of ambitious female professionals is considering a bid for Deutsche Bank's UK fund management arm in a move that resonates with delicious ironies.

Ms Horlick has requested details of the Deutsche business and is considering adding it to her new fund management operation, Bramdean Asset Management, which she launched late last year.

Deutsche, of course, was the bank that suspended Ms Horlick from its fund management business in the winter of 1997, prompting her now legendary flight to Frankfurt, accompanied by a pack of journalists, to confront her German pay masters.

Furious at her treatment, she was determined to clear her name of allegations of greed and disloyalty after she was accused of trying to persuade senior colleagues to jump ship and join a rival. Her suspension, for breach of contract, far from damaging her reputation, helped make her name as one of the country's leading women in business and finance.

Since that famous Deutsche debacle, she founded, and then left, SG Asset Management, turned down the chance to run AMP's £30bn asset management business in Australia and has now set up Bramdean.

In between she had a high-profile bust up with her "supernanny" Joan Buckfield, which ended up in lurid newspaper revelations, and suffered the personal crisis of the death of her daughter, Georgina, after a struggle against leukaemia.

She published a book, Can You Really Have It All?, and survived a high-profile row with her client Sir Mark Weinberg, the insurance magnate, over SG Asset Management's investment performance.

But while Ms Horlick has proved a stubborn fighter and survivor, her interest in a potential bid for Deutsche's UK asset management business highlights the German bank's failure to succeed as a force in fund management in the City of London.

Analysts have long speculated that Deutsche would put its UK asset management arm up for sale, even before Kevin Parker, appointed as head of the global asset management division last September, announced a review of its future in December.

The UK arm, which handles mostly institutional but also retail money, has been leaking funds from institutional clients for some time. It has lost a number of key mandates in recent months, including the Railway Pensions Scheme, Prudential and the Lothian Pension Fund.

Esther Nass-Fetzmann, a spokeswoman for Deutsche Asset Management, said yesterday: "Kevin wanted to do a complete review and look at all the options ... It's obviously struggling, that's why it's under review."

Things could not get much worse. Fourth-quarter pre-tax profits at Deutsche Asset Management overall collapsed 97 per cent to €6m from €207m a year earlier, partly due to restructuring costs of €88m.

One analyst said: "The basic problem is that [Deutsche] have never known how to run this business. They've had it for 15 years, but they've never quite got it straight."

Asset management is a people business and operations like Deutsche's, put together through a series of acquisitions, are often plagued by clashes of culture. The received wisdom in the City is that where people are constantly watching their backs, investment performance tends to be poor.

There were problems from the start for Deutsche in London. It broke into the City through the purchase of Morgan Grenfell, the merchant bank with a long history as one of the Square Mile's most pre-eminent institutions. With that deal came a fund management business, Morgan Grenfell Asset Management, but in 1996 its blue-chip reputation was torn apart by the Peter Young affair.

Young was a City whizz-kid whose stellar performance left many experienced City hands scratching their heads for an explanation. He was finally exposed for unauthorised trading, a scandal that echoed some of the Nick Leeson affair that had previously brought down Barings.

The Peter Young crisis led to Morgan Grenfell paying out more than £400m in compensation and culminated in a bizarre court case when Young arrived to take the witness stand dressed as a woman.

Throughout all this Ms Horlick was seen as another rising star at Deutsche's asset management arm. During the Young debacle she played a key role, dashing around the City, new-born baby in tow, persuading valuable clients of her willingness to stay and management's ability to hold things together.

But a few months after Ms Horlick helped repair Morgan Grenfell's reputation, the German bank suspended her. However, Robert Smith, her then chief executive, had underestimated Ms Horlick's fighting qualities that culminated in one of the City's most colourful days in recent years.

At 8am on the day after she had been given the bad news by her ex-employer, she emerged from her Kensington home to be greeted by a pack of reporters eager to hear "superwoman's" story. She accused the bank of "trumping up" charges and set off to confront her bosses.

Sweeping into Deutsche's London offices, she shrugged off security guards and marched to the third floor for a showdown with Mr Smith who, perhaps sensibly, was not there.

"Justice will be done, don't you worry," she declared to her accompanying posse of hacks as she swept out of the building and headed straight to Heathrow and a flight to Frankfurt.

Later that afternoon she was granted a two-hour meeting with a senior member of Deutsche's legal department to hear her defence of the poaching allegations which she claimed arose out of an innocent enough lunch she had recently shared with a rival.

Her £1m claim for unfair and wrongful dismissal was an acute embarrassment for Deutsche, an episode the City has never forgotten.

Now she is back, sniffing around the remains of Deutche's London asset management arm, although she is likely to face stiff competition.

A source close to Deutsche's review process said: "There's a lot of interest in this asset. It's still in an early phase, but there is strong initial interest from good names."

Martin Cross, an analyst at Teather & Greenwood, said: "Deutsche Bank are clearly desperate to get rid of it."

Analysts estimate the selling price would be about 1 per cent of the funds under management, which were €78.5bn at the end of last year. Analysts said such a "large pot of money" would attract a lot of bid interest. Names touted include New Star Asset Management, Schroders, and big US and European banks that want to enter the UK asset management market.

Deutsche has tried to fix problems at an international level at the asset management arm. The revamp prompted the departure of senior people including Paul Manduca, the head of the UK and continental Europe businesses. Josef Ackerman, the chief executive of Deutsche Bank, said at the beginning of this month: "We will try to fix it. If we can't fix it, we'd consider selling it, but only for a reasonable price."

If he picks up the phone to his former employee now residing at Bramdean Asset Management, he might well find a willing buyer.