Torchmark Corp. will divest Waddell & Reed, which manages $4 billion for pension fund clients and $20 billion in mutual funds.
Henry J. Herrmann, Waddell & Reed president and CIO, said Torchmark plans to sell about 20% of Waddell & Reed in an IPO, likely early in 1998, and spin off the rest of the asset advisory firm to Torchmark shareholders, likely next October. He expects no changes in the firm and will retain his current position. He said Torchmark is divesting the firm to enhance shareholder value. He noted money management firms now typically command a price-earnings ratio of about 18 compared to about 14 for insurance companies.
Waddell & Reed is Torchmark's only investment advisory firm. Torchmark executives couldn't be reached for comment.
Enova Corp., San Diego, and Pacific Enterprises, Los Angeles, will restructure their pension plans next year, following the merger of the two companies. The combined defined benefit plan will have $3 billion in assets, and the defined contribution plan will total $1 billion, said Sonny Hatten, assistant treasurer of Pacific Enterprises. The pension plans have a couple of managers in common, he added.
Charles Schwab Corp. accelerated technology upgrades to its telephone and online access systems in the wake of extreme market volatility at the end of October. The company is working to double online capability immediately, said Linnet F. Deily, president of Schwab Institutional, at its annual conference in San Francisco. A new mainframe recently was installed, and Ms. Deily said AT&T is stepping up the installation of new equipment to quadruple telephone voice response in its Phoenix and Denver facilities.
Schwab's technology budget for 1997 is $25 million, as much as it spent in total over the previous 10 years. Schwab will spend another $25 million in 1998 on technology upgrades.
National City Corp. is acquiring Sterling Ltd., an investment management and financial counseling firm for high-net-worth individuals and families. Terms were not disclosed. Sterling will continue to operate under its own name, but it will be part of National City's Private Client Group, which now manages nearly $22 billion. National City has $42 billion in total assets under management.
Sterling has under management $275 million in discretionary assets and $160 million in alternative investments in limited partnerships.
Stolberg, Meehan & Scano closed its second private equity fund with $100 million that will be invested in its Executive Mavericks and Corporate Misfits strategy. Among the tax-exempt investors are the endowment funds of Yale University, New Haven, Conn., and Harvard University, Cambridge, Mass., and the pension fund for Warner-Lambert Co., Morris Plains, N.J.
The stratey invests with executives and entrepreneurs who wish to purchase product lines or brands lost within corporations; invests in small businesses; buys underperforming companies and finances the restart of operations that have been shut down.
CORRECTION: A Nov. 5 item on the Archdiocese of Los Angeles misspelled the names of Jose Debasa and Asset Strategy Consulting.