It’s the biggest purchase of a U.K. fund group in the past couple of years.
But what makes last month’s sale of F&C Management (valued at £700 million, or $1.28 billion) even more noteworthy is that the acquirer, ISIS Asset Management, is the same firm that did the previous big U.K. fund deal.
In the summer of 2002, ISIS, itself the product of a 1997 merger between English insurer Friends Provident and Scottish asset manager Ivory & Sime, bought Royal & SunAlliance’s investment business for £240 million.
“In this environment all business models are under scrutiny,” says ISIS’s deal-making CEO, Howard Carter. “The F&C deal saves money and gives us product and geographic spread.”
ISIS’s all-share takeover creates the U.K.'s fourth-biggest investment firm, with more than £120 billion in assets. ISIS contributes £63 billion of that.
Carter got to know F&C’s CEO, Bob Jenkins, long before they ever sat down at the bargaining table. They frequently met at industry gatherings, and Carter confides that they often discussed how complementary their two businesses were. ISIS generates 98 percent of its revenues in the U.K.; F&C, whose heritage dates to the days of Benjamin Disraeli, reaps 73 percent of its income on the Continent.
The combined firm will use the nearly 140-year-old F&C name and have a nicely balanced client list: 30 percent institutional, 30 percent retail, with the remainder divided among investment trusts and insurance customers. F&C’s former parent, Dutch insurer Eureko, will retain a minority stake.
Carter, 53, becomes CEO; Jenkins, also 53, becomes nonexecutive chairman. A former economics lecturer at Leeds Polytechnic in his native Yorkshire, Carter reckons that merger efficiencies will allow F&C to save an initial £33 million. Money to be put aside for the next big deal? Says Carter, “We now have got to the right scale to grow this business organically, but if the right deal came along, we would look at it.”
