BOSTON - Two Boston banks have boosted their asset management businesses through what analysts at Investment Counseling Inc. call the "convergence of multiple agendas."
Fleet Financial Corp. is buying Columbia Management Co. of Portland, Ore., for $400 million, with a strong eye on Columbia's $6.5 billion in mutual funds.
Meanwhile, Westfield Capital Management Co. Inc. of Boston merged with Boston Private Bancorp. Co. Inc. in an all-stock transaction.
In the deal, Westfield's shareholders will receive 3.9 million shares of newly issued Boston Private Bancorp common stock, the price of which has ranged this year from 47/8 to 81/4 per share, or a total of $19 million to $32 million.
Westfield employees will own about 40% of the outstanding stock of Boston Private Bancorp.
The merger was desirable because Westfield said it wants to offer its clients private banking services.
Both acquired companies are private asset management firms looking for the support or distribution available through a larger entity.
And both Columbia and Westfield executives have stated clear intentions of the acquired firms operating independently and maintaining their current cultures.
The two banks seem willing to allow the companies their independence in order to expand the banks' asset management reach.
Chas Burkhart, president of Investment Counseling, West Conshohocken, Pa., said many employee-owned independents are questioning whether they can be competitive enough in technology, distribution and other resource-intensive areas without the capital backing of the right partner.
Columbia on block for year
Columbia has been up for sale for the past year, and although some clients have expressed concern, little business has been lost because of the uncertainty, said Mike Nelson, Columbia vice president of mutual fund services.
However, at least one client was concerned enough to put Columbia on watch.
The Oregon Investment Council voted June 25 to put Columbia on its watch list because of the potential sale.
Not only will Fleet pay $400 million for Columbia, but also it will pay earnout and management retention incentives for the next five years, which could cost an additional $150 million.
Retaining their own identities
Columbia and its 200-plus employees, including 24 portfolio managers, will remain at the Portland office, operating independently from Fleet.
Fleet Investment Advisors, Boston, has about $50 billion in assets under management, of which at least half is institutional tax-exempt assets. But it only has a little more than $5 billion in mutual funds.
Columbia has total assets of $22 billion, of which about two-thirds comes from institutional tax-exempt clients.
Boston-based Westfield also intends to keep its own identity. The firm has $1.3 billion under management, of which about half is from institutional tax-exempt clients. Westfield and Boston Private Bancorp both are very interested in high-net-worth individuals, which make up the other half of Westfield's business.
The firm is expected to keep its name and location at Boston's One Financial Center. Investment management principals are C. Michael Hazard - who established the firm in 1989 - Arthur Bauernfeind, Michael J. Chapman, Stephen Demirjian and William Muggia.