UK – ISIS Asset Management is buying a 15% stake in a new alternative investment house called Cardinal for 7.5 million euros.

The UK fund manager has signed heads of agreement with Cardinal Capital Partners, which trades as Cardinal Asset Management.

There would be another, unnamed, partner in the venture, with the balance being held by Cardinal’s principals, former Zurich Capital Markets executives Nick Corcoran and Nigel McDermott.

It called the purchase a “controlled move into alternative asset management”.

“We haven’t got hedge fund exposure,” said ISIS chief executive Howard Carter in an interview. “It’s the one area we don’t have.”

He said Cardinal would focus on hedge funds and structured products, though the exact offering would “depend on what our clients’ needs are”.

“We are seeing a lot of interest – but to turn that into demand you need product,” Carter added.

The firm said in a statement that it has been considering for some time how it could enter the rapidly growing alternatives sector.

Under the deal, yet to be finalised, ISIS would have privileged distribution in the UK and Europe.

ISIS also said that it has now finished the headcount reduction that followed the 2002 merger of Friends Ivory & Sime and the fund arm of Royal & Sun Alliance. Headcount has fallen to under 500 from 750 at the time of the merger.

Around 60 staff will transfer to J P Morgan under a previously announced outsourcing deal.

The firm’s profits before tax, goodwill amortisation and exceptionals rose 14.8% to 24.8 million pounds (37 million euros). Assets under management stood at 63.5 billion pounds at the end of 2003 against 60.1 billion at the end of the previous year.

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