ISIS gets F&C in reverse takeover

LONDON — ISIS Asset Management acquired F&C Asset Management in a reverse takeover from F&C parent Eureko.

Friends Provident, which owns 67% of ISIS Asset Management, will merge the two units and own 51% of the combined entity, which has £120 billion ($220 billion) in assets under management, making it the fourth largest U.K. asset manager. The cash and stock deal values F&C at just more than €1 billion ($1.2 billion), said Alain Grisay, F&C deputy chief executive, who expects the deal to be closed in September.

The ISIS brand will be dropped, and F&C staff will take responsibility for the combined institutional business. Mr. Grisay will be head of institutional asset management for the combined firm. Tony Broccardo, current chief investment officer for F&C, will be CIO of the new company. Howard Carter, ISIS chief executive, will become CEO, and Robert Jenkins, F&C chief executive, will be non-executive chairman of the new group.

The deal gives F&C a long-awaited opportunity of a stock-market listing and provides ISIS with access to retail and institutional distribution networks outside the United Kingdom.

Amsterdam-based Eureko announced in January that it was seeking a listing for F&C, which includes the asset management operations of Achmea one of the largest institutional asset managers in the Netherlands.

Around 1% of F&C's total assets of £56.4 billion at the end of 2003 were managed for U.S. clients who will not be affected by the deal, said Mr. Grisay. The firm runs mainly emerging market mandates for its U.S. clients and ISIS has no presence in this asset class. The F&C investment process and key investment staff will remain in place. There will be staff losses as a result of the deal, but the majority of institutional money managers are expected to remain in place, said Mr. Grisay.

As a public company, F&C will be able to translate its shadow equity program into a more tangible compensation system. This will help retain key staff and build loyalty, said Mr. Grisay. F&C executives and key staff have volunteered to invest their shadow equity assets into the new company and will lose this money if they leave within the first two years, he added.

At the end of 2003 ISIS had £63.5 billion in assets under management around 80% of which was in institutional assets run mainly for its parent company, he said.

PARIS — The Fonds de Reserve pour les Retraites hired six active equity managers to run a combined €1.88 billion ($2.33 billion), the final selections in a search the new €16.5 billion fund launched last July.

In U.S. large caps, Deutsche Asset will run €460 million in value and AGF Asset Management will run €460 million in growth, according to a statement from the system. Robeco Institutional was named standby manager for the value portfolio, and Goldman Sachs for growth.

AXA Investment and Schroders will run €240 million each in pan-European non-eurozone equities, with INVESCO as standby manager, the statement said. In Pacific-area equities, including Japan but excluding emerging countries, Capital International and Morgan Stanley will run €240 million each, with Nomura Asset as standby.

Funding will come from taxes and the privatization of state-run companies. Mercer Investment Consulting assisted.

The new plan also hired Goldman Sachs Asset Management International as its first transition manager. The firm was chosen because of its methodology, risk control during the organizational process, low transition cost and price, said Jean-Louis Nakamura, finance director. GSAM has a three-year contract.

Separately, by the end of the year the system will consider adding its first commitments to private equity and socially responsible investments, according to Christelle Cuzou, spokeswoman. The plan's supervisory board would need to approve an RFP before it would be issued, Ms. Cuzou said. Fund officials have not decided whether Mercer will assist nor have they determined the timeframe or portfolio sizes, she said.

LONDON — U.K. retirement assets will grow faster than the economy over the long term, according to UBS Global Asset Management's annual Pension Fund Indicators research report. That's because individuals are starting to save more, and pension funds that have been closed to new members will take a long time to "die out," said Mike Housden, UBS Global managing director.

Also, pension funds are trying to better match their investments to liabilities, rather than following the latest trends. At the same time, pension funds will continue to put more money into alternative investments, including hedge funds, said Mr. Housden. However, plan sponsors will establish more defined contribution and hybrid schemes than defined benefit plans, he added.

BRUSSELS — ASBL Pensions Complementaires de la Banque Bruxelles Lambert plans to add a 2% to 2.5% hedge fund allocation by the end of the year. The €550 million ($667 million) pension fund is looking to diversify and gain higher returns, said a plan official who did not want to be identified. Funding will come from the plan's equity allocation, now 32% of total assets. No consultant is being used.

GLASGOW — Weir Group PLC Pension & Life Assurance Scheme, Glasgow, appointed State Street Corp. as global custodian of the £400 million ($732 million) pension plan. The Weir Group reorganized the externally managed portion of its plan after closing the scheme to new entrants, said Philip Batty, group pensions manager. Barbara Mugall, group pensions officer, would not provide further details.