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13 Mar 2007

Activist Hedge Fund To Sell Stocks in Gartmore

Activist hedge fund Carrousel Capital had agreed to sell its shares in £386 million ($744.8 million) Gartmore European Investment Trust, refusing the option of a tender offer to close out its position at a tight discount. The hedge fund currently owns 28.03% of Gartmore and is its biggest shareholder.

Carrousel Capital said in informal talks with Gartmore that the hedge fund had plans to buy into the trust, then restructure it into an umbrella fund which could offer a range of investment mandates. However, Gartmore's European shareholders voted against proposals by Carrousel to put three new directors on the board to carry out the plan.

Bruno Sanglé-Ferrière, CEO of Carrousel said in a letter to shareholders, "Carrousel is not seeking, and has never sought, control of the fund. Neither is it seeking to wind-up the fund as has been suggested in some quarters. Carrousel's interest in the fund has already had a beneficial effect. Shareholders have seen the NAV discount narrow from 9% to less than 3% since we invested."

However, after the vote to sell the hedge fund's entire holding he said, "It's not a change of strategy. We tried to put people on the board and we failed. We want to put that behind us and close that chapter."