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City Veteran Backs Rothschild In Mining Row

(c) Sky News 2013

One of the City's best-known fund managers is poised to back the billionaire financier Nat Rothschild in his battle to wrest control of a London-listed coal mining group.

I understand that John Duffield, a City veteran whose exploits at Jupiter and New Star made him a regular and colourful fixture on the financial pages of the national media, has decided to support Mr Rothschild's effort to unseat 12 of the 14 board directors of Bumi plc.

Mr Duffield's latest venture, Brompton Asset Management, owns approximately 1 per cent of Bumi. Earlier this week, Schroders (LSE: SDR.L - news) , which owns about 3.5 per cent, and Sofaer Capital, another major investor in the miner, came out in support of the controversial financier.

The battle for control of Bumi promises to be one of the year's most fractious shareholder battles. Winning Mr Duffield's backing will be viewed in the City as a significant vote of confidence in Mr Rothschild's campaign to wrest control of Bumi, for which he has proposed a slate of new directors.

Mr Duffield has maintained a comparatively low profile since establishing Brompton Asset Management in 2010. He made his name, and fortune, at Jupiter, notching up a £175m fortune from its sale to Commerzbank (Xetra: 803200 - news) in 1995. He departed in acrimony, though, and in 2000 set up New Star, which enjoyed early success and floated in 2005. It was later hit by the slump in commercial property, and was sold for a fraction of its peak value.

Mr Rothschild helped to create Bumi by raising funds for a vehicle called Vallar more than two years ago. Listed on the London Stock Exchange (LSE: LSE.L - news) , Vallar acquired a range of assets in Indonesia that took Mr Rothschild into business with the south-east Asian country's powerful Bakrie family.

Tensions emerged shortly after the deal's consummation, however, and Mr Rothschild quit the board late last year, citing a breakdown in the relationship.

Among the directors he is trying to oust is Sir Julian Horn-Smith, a grandee of corporate boardrooms. In a statement earlier this week, Sir Julian accused Mr Rothschild of being "highly confrontational".

"As a board we have been working extremely hard to solve the various highly complicated and challenging governance, operational and legal issues at the Company and to maximise value for shareholders.  All of these issues essentially derive from the original deal that Nat Rothschild was instrumental in putting together.

"The Company is moving ahead with its investigation into evidence of financial irregularities at Bumi Resources and Berau while overseeing a focus on improved operational and financial management, as evidenced by this morning's trading update.  The Board is also progressing its proposal to unwind the relationship with Bumi Resources and the Bakrie Group in a transaction that will result in an operating group focused on Berau and with significant cash resources.

"Nat Rothschild's time as a director of Bumi was characterised by taking highly confrontational positions that proved counterproductive to addressing the Company's issues and we cannot see how re-instating him to the Board will be beneficial to shareholders."

Mr Duffield could not be reached for comment. A spokesman for Mr Rothschild declined to comment.