BMO could face rival bids for F&C Canada's Bank of Montreal could face competition in its pursuit of UK fund house F&C Asset Management, despite shareholders being advised to accept the deal. BMO on Tuesday reached an agreement with F&C, which traces its history back to the formation of Foreign & Colonial Government in 1868, to acquire the UK group for £700m in a 120p in cash per share offer. IN Investment Strategy Despite recent management and shareholder upheaval at the listed UK fund company, which went through three different chief executives in 2012 alone, analysts believe BMO could face competition from other interested parties. Ray Soudah, chief executive of Millenium Associates, a Swiss merger and acquisition consultancy, believes counter offers are likely while F&C seeks shareholder approval for the deal over the next four weeks. He says: "F&C is a listed company so many people have examined it and there are likely to be many interested parties. There is no reason why BMO should not be successful, but it should not rule out other buyers coming to the table. A former senior employee at F&C agrees that the UK investment house, which launched the world's first collective investment vehicle, would attract more bidders. "Others are bound to come out of the woodwork," he says. Indeed, Standard Life Investments, the second-biggest shareholder in F&C, with a 10 per cent stake, last week said that it was open to considering rival bids. BMO: The ambitious Canadian group is keen to become a top-50 global money manager BMO's £700m bid for F&C is just the latest move in a series of acquisitions by the ambitious Canadian group, which has set its sights on becoming one of the world's top 50 money managers by 2017. Part of the broader Bank of Montreal financial group that was founded in 1817, BMO's global asset management business is led by two co-chief executives, Barry McInerney, who is responsible for US and international operations, and Rajiv Silgardo, who takes care of Canada. Mr Silgardo, part of a 10-strong team that joined from Barclays Global Investors in 2009, has made no secret of his ambitions for BMO to become a global force in the asset management industry. He confidently predicted last year that assets in BMO's fund management operations would more than double, from around $132bn to more than $300bn in the following four years. Speaking to the FT late last year, Mr Silgardo said BMO saw "real opportunities" for expansion in Europe, following its acquisition of Pyrford, a London-based asset manager, in 2008. Acquisitions have also been an important part of BMO's plans in the US and Asia. It has built a significant presence in the US after snapping up Marshall & Ilsley, a Midwest banking group, in 2011 and combining it with Harris, another banking group it acquired in 1984. Those deals brought BMO a large base of wealthy US clients. BMO is also in the process of trying to expand its asset management capabilities in Asia. In 2011, it bought Lloyd George Management, an emerging markets specialist based in Hong Kong. It bolstered its position in China with the acquisition in 2012 of a 20 per cent stake in Cofco Trust, a subsidiary of one of the largest state-owned enterprises. David Cumming, global head of equities at Standard Life, said: "The price agreed represents an attractive valuation from the standpoint of the Canadian Bank. Consequently we intend to keep our options open should another suitor for F&C emerge. There are several large US fund companies that would like to increase their presence in Europe's asset management industry, as well as big private equity groups looking to expand into fund management for the first time, according to Mr Soudah. He believes BMO may consequently be forced to improve its offer. Diana Mackay, chief executive of Mackay Williams, a fund research company, agrees that "there may be some private equity houses hungry and interested." Private equity interest in asset management companies helped fuel a spike in M&A activity in the fund sector last year, with big names such as Warburg Pincus, Blackstone and KKR homing in on acquisition targets. However, Ms Mackay adds that F&C, which has suffered two consecutive years of outflows from European investors, has "been in a bit of limbo" following a boardroom coup in 2011 that led activist investor Edward Bramson to oust former chief executive Alain Grisay in May 2012. Mr Bramson stepped down as chief executive six months later in favour of a non-executive chairman role at the fund house, and was replaced by F&C veteran Richard Wilson. As a result of this upheaval, the fund house has dropped off the radar of Europe's biggest fund selectors, according to Ms Mackay. Millenium's Mr Soudah also acknowledges that F&C has experienced a tough period recently, but he believes this is unlikely to deter potential buyers. He says: "F&C has experienced a lot of shareholder activism and management changes in the past two years, which is never good for asset management companies. But the company has a good brand and the capacity to grow to be much larger than what it is. Amin Rajan, chief executive of Create Research, a fund consultancy, recognises this point. He believes F&C could now revive its fortunes following a fall from grace that has seen assets under management decline from £120bn in 2004, when a three-way merger propelled it to become Britain's fourth-biggest investment house. He says: "F&C has long punched below its weight. It will finally have the much-needed clout from BMO's distribution reach. F&C currently manages £80bn of assets, down from £92bn at the end of June. Four strategic partners, all pension funds, account for about 60 per cent of assets but several of these partners, including Friends Life, have pulled significant mandates from the fund house in recent months. The company revealed in March that Friends Life would withdraw mandates worth £6.2bn in the first half of the year, while Achmea, for which it manages £25bn in assets, will pull out £10.3bn in mandates at the end of an exclusivity period in October. Mr Soudah believes that F&C can easily regain its asset base of more than £100bn and perhaps double assets under management with commitment from a suitable backer. Dan Werner, an equity analyst at Morningstar, the data provider, adds: "[F&C] could appeal to other asset managers seeking or solidifying their presence in the UK or Europe. However, the recent restructuring and the modest price being paid tells me that interest to acquire F&C is likely tepid. Nonetheless Mr Werner believes the acquisition "makes sense" for BMO as many Canadian banks have already expanded their asset and wealth management businesses in the last three years. This is due to the "the stability of the fee revenue [fund businesses] generate in light of slowing loan growth domestically, along with tighter margins in [retail] and commercial banking businesses," he says.