New Star Asset Management said on Friday its assets under management rose 7 percent in the six months to the end of June amid a strong performance across its portfolios.
The figure reached 18 billion pounds at New Star, which along with many of its peers has benefited from rising equity markets in recent years.
Operating earnings jumped 90 percent to 30.5 million pounds, with operating earnings per share at 10.1 pence from 5.3p last year, the firm said in a statement.
Shares in New Star, which was listed last year on London's junior Alternative Investment Market (AIM), were up 0.5 percent in early trade at 417 1/4 pence, while the broader market fell.
New Star's interim results demonstrate continued strong progress, driven largely by accelerating net inflows into the group's retail funds, brokerage firm Bridgewell said in a note.
It said New Star was trading at 17.8 times estimated earnings for 2007, assuming a normalised tax rate of 25 percent. While above its peer group average, this price premium is justified by New Star's prospects for strong earnings growth, Bridgewell said.
Carolyn Dorrett, analyst at Citigroup, said in a note she has a buy recommendation on New Star due to its strong earnings per share growth, buoyant sales and its potential to benefit from consolidation in the fund management sector.
The willingness of New Star to declare an interim dividend of 4 pence per share was significantly above Citigroup's own estimate of 1.7 pence, Dorrett said.
Sales of New Star's retail funds in Britain rose 40 percent over the period to 712 million pounds, while international sales business surged 181 percent to 180.3 million pounds.
The firm said its largest selling retail fund has been the New Start Property Unit Trust, which it described as one of the biggest selling funds in the British market. Property funds have been popular as brick and mortar assets have enjoyed robust returns.
The company said it has logged net inflows of 290 million pounds into its institutional fund business. Within its hedge fund business, net inflows totalled 72 million pounds.
We are confident of New Star's growth prospects over the short and medium term, subject to market conditions and investment performance, and believe that further scope remains to increase our operating margin, said John Duffield, chairman and company founder.