PARIS -- After Yamaichi Securities Co. collapsed on Sunday, Nov. 24, Philippe Collas was on the phone to Tokyo first thing the next morning.
Two months later, the chairman and chief executive officer of Paris-based Societe Generale Asset Management emerged as the victorious bidder for an 85% stake in Yamaichi International Capital Management Co., with $20 billion in assets under management.
It helped, of course, that Yamaichi and SocGen had dealt with each other since 1982, and that the French money management unit subadvised a $300 million global bond mutual fund for Yamaichi International launched in September, with a $500 million followup fund waiting in the wings.
But the purchase spoke volumes about Mr. Collas' opportunistic nature -- a quality exhibited frequently since he moved in November 1995 from the bank's capital markets division to revamp the sleepy money management arm.
It's that type of hard-driving approach that has led to a series of deals intended to turn Societe Generale into a player in international money management.
Assets under management have soared to 900 billion French francs ($145 billion) -- up from 350 billion francs at the end of 1995. Aside from the purchase of Yamaichi international, key developments include:
* Formation of Societe Generale Asset Management in late 1996, combining the bank's domestic mutual fund and discretionary money management arms into a single entity, with Mr. Collas at its head.
* Creation last year of a U.K. money management arm headed by former Morgan Grenfell Asset Management chief Nicola Horlick and former star Mercury Asset Management manager John Richards. (See related story, page 47.)
* Acquisition in late February of investment banking specialist Cowen & Co., New York, doubling SGAM's $6 billion in assets in the United States. Another U.S. purchase will be made in coming months, Mr. Collas said.
* Formation of a London-based central and Eastern European emerging markets equity team. SGAM is creating a holding company to provide asset allocation for the London-based team, its Singapore-based emerging markets equity team, and a Paris-based emerging markets debt team.
* Formation of a new joint venture with Frank Russell Co. that will make Russell's multimanager funds available to SGAM and bank clients across most of continental Europe, significantly expanding the bank's product line (Pensions & Investments, April 6).
SGAM'S THREE PILLARS
On top of SGAM's 580 billion francs ($94 billion) in assets run out of Paris -- making it France's leading mutual fund player and second-largest institutional manager -- it has the potential to become a world-class manager. (The 1997 acquisition of Credit du Nord also boosted the bank's assets under management.)
Mr. Collas, who is given to drawing organizational charts to illustrate his points, said SGAM is focusing on Europe, the United States and Japan as the "three pillars" of its money management business.
The question remains, though, how Mr. Collas will fit the pieces of his money management puzzle together. While his units have their own strengths, they don't mesh together easily, offering different types of products to various types of clients.
"Certainly in terms of what's been communicated to the marketplace, we can't see any grand plan behind it," said one consultant, who asked to be unnamed.
"It does seem to us that they've opened the checkbook in advance of revenues coming in."
Mr. Collas was cagey about the bank's long-term goals. Observing that his firm has risen from 49th to within the top 25 money managers in the world since the end of 1995, he said: "We want to make money for our investors."
NO INTEGRATION PLANS
But Mr. Collas is clear in saying there is no plan to integrate SGAM's scattered money management operations.
Drawing a comparison with SocGen's investment banking side, Mr. Collas said there is a unit in each country. Indeed, the bank has gone on a buying spree overseas, expanding into Argentina, Thailand, the United Kingdom and the United States.
"It's exactly the same for the asset management business," he said. "You can't manage Japanese (securities) from the U.S."
What most of the units share, he said, is a similar investment approach that starts with top-down macroeconomic decisions but is not tied to value or growth styles. Rather, SGAM is opportunistic in its investment style, as it is in its expansion efforts.
What is needed at the top is an asset allocation process for the global business, he said. To accomplish this, SGAM draws together its chief investment officers from the United States, France, Japan and two or three other countries to make asset allocation decisions.
CROSS-SELLING STRATEGY
Instead of global integration, SGAM has embarked on a strategy of selling its products from one geographic region to another.
Yamaichi's Far Eastern products are being offered to SGAM's European customers, while its European products are being sold in Japan. Through SG Yamaichi, SGAM is "selling our products to Japanese clients and it's really the right time to do that," as Japanese clients are shifting assets overseas, Mr. Collas said.
Yet some observers are skeptical, noting cross-selling strategies generally have fared poorly.
"We know it's very difficult to manage different brand names," said one competitor.
Plans are to expand cross-selling to and from the United States when SGAM operations there increase to a sufficient scale. SGAM officials think the current operation is "too small and we think we need very good expertise in managing U.S. equities," Mr. Collas said.
(Cowen's money management products are very specialized, focusing on small-cap stocks in information technology, health care and communications sectors, while SGAM Corp., New York, primarily services private clients.)
Mr. Collas declined, however, to say what size is required to have an impact in the huge U.S. market. "We are not aiming at size," he said. "The best thing for us as an asset management company is to have the best people on board."
HORLICK'S CONTRIBUTION
Indeed, Mr. Collas said his search for the best people led him to hire Nicola Horlick and John Richards as joint managing directors of SGAM's new British unit.
Ms. Horlick, widely respected for building Morgan Grenfell Asset Management's institutional business, had an extraordinarily public falling out with her masters. After it emerged in September 1996 that portfolio manager Peter Young had improperly invested Morgan Grenfell unit trust assets, causing Deutsche Bank to pitch in L220 million to plug the gap, Ms. Horlick's boss and mentor Keith Percy was forced out by Deutsche Bank.
Ms. Horlick ended up flying to Frankfurt to plead for her job, after reports surfaced that she was considering defecting to ABN-Amro Asset Management.
Asked if the accusations and sensational headlines affected Ms. Horlick's credibility in the U.K. market, Mr. Collas said the bank has done well "because we hired strong people with character."
Mr. Collas provides a ringing endorsement for Ms. Horlick, calling her "a tremendous asset of the company."
SGAM UK officials have set out an ambitious target of raising L5 billion ($8.4 billion) in five years, taking advantage of dissatisfaction with performance among the U.K.'s four leading active managers.
POTENTIAL OVERLAP
While the London-based team primarily will target the U.K. institutional market, Ms. Horlick hints they may pick up U.S. clients.
There might be overlap, however, with products developed by SGAM's Paris team, which is focusing on European equities and bonds. Roughly 70% of the team's assets under management are invested in fixed-income products, with the balance in equities.
Asked how he would reconcile any conflict, Mr. Collas said the London unit still has far less under management than does the Paris unit.
"For the time being, competition (between) Paris and London in terms of managing European asests is irrelevant," he said.
The London unit is tackling the U.K. pension market, he said. However, he will have some help: the well-regarded Mr. Percy has been brought on as a consultant to both the U.K. and global businesses.
