CHICAGO - British Petroleum Co. PLC executives have decided Amoco's trust investments staff will oversee BP Amoco PLC's $11.9 billion in U.S. employee benefit assets, sources say.
Although no one will comment for the record, the move probably means pension executives at BP America Inc., Cleveland, will lose their jobs, and BP's external money managers will face a review by Amoco's Chicago staff.
The change would take effect after the merger of British Petroleum Co. PLC and Amoco Corp. is finalized, which is planned to occur before the end of the year.
Both Marvin L. Damsma, director, trust investments for Amoco, and Howard W. Harpster, director-pension investments for BP America, declined comment. Executives in BP's London investment unit could not be reached.
Amoco, which relies heavily on transportable alpha strategies for its $2.9 billion in defined benefit assets, shares no managers with BP, which has $2.1 billion in defined benefit assets.
Similarly, there is no apparent crossover of managers overseeing Amoco's $4.8 billion of defined contribution assets, and BP America's roughly $2 billion in defined contribution assets.
(Amoco's asset figures come from data as of Sept. 30 provided to Pensions & Investments for its upcoming pension fund directory; BP's come from the 1999 Money Market Directory of Pension Funds and their Investment Managers).
The choice of Amoco's operation is counter to industry speculation last summer; at that time, some observers thought BP would assign the assets to either the Cleveland group, where BP Chairman Sir John Browne had once worked, or to its largely internal operation in London. BP manages about 9.5 billion pounds ($16 billion) there.
A change in control to Amoco could result in larger assignments for Amoco's existing lineup, a search for new managers that would fit into its alpha transportation environment, or both.
Amoco's defined benefit managers are: Bankers Trust Co.; DSI International Management Inc.; Franklin Portfolio Associates; RhumbLine Advisers; Travelers Investment Management Co.; State Street Global Advisors; WorldInvest Ltd.; Lend Lease Real Estate Investments; ARM Capital Advisors Inc.; Chase Manhattan Bank N.A.; E.H. Capital Group; First Quadrant; Innovest Capital Management; Lazard Asset Management; Martingale Asset Management LP; Noddings Investment Group; Numeric Investors LP; Salus Capital Management; Standish Ayer and Wood; and SSI Investment Management Inc.
BP America's defined benefit investment manager lineup is: Alliance Capital Management LP; Baring Asset Management Ltd.; Fiduciary Trust Co. International; Hotchkis & Wiley; Mellon Capital Management Corp.; J.P. Morgan Investment Management Inc.; PanAgora Asset Management; United Capital Management; and Westmark Realty Advisors LLC, according to the 1998 MMD.
Amoco's defined contribution managers are: State Street Global, Bankers Trust and Brinson Partners.
BP America uses: Fidelity Management & Research Co.; INVESCO Capital Management Inc.; Loomis, Sayles & Co. LP; J.P. Morgan; Pacific Investment Management Co.; and Vanguard Group.
Amoco uses Chase Manhattan as its defined benefit master trustee and global custodian and State Street Bank & Trust Co., as defined contribution master trustee, while the 1998 MMD shows BP America uses Bankers Trust for both its defined benefit and defined contribution plans.
Amoco's pension executives are known in the industry as savvy practitioners of alpha transportation. Mr. Damsma and colleague Gregory T. Williamson wrote a chapter on the subject for "Alpha: The Positive Side of Risk, Daring to Be Different," Investors Press Inc., 1996.
In alpha transportation, investment managers are sought that produce positive alpha - positive relative risk-adjusted returns - almost regardless of the asset class.
Once a group of managers expected to outperform on a risk-adjusted basis is chosen, the fund's asset class exposure is shifted, using derivatives, into the selected markets.