Invesco has rolled out a $200 million cost-cutting plan, with the aim to achieve most of the net savings by the end of next year, the company announced Tuesday during its third-quarter earnings call.
The money manager is targeting net savings of $200 million expected by the end of 2022, with $150 million, or 75% of the savings, to be reached by year-end 2021, an earnings presentation published by the firm shows.
Allison Dukes, chief financial officer and senior managing director, told analysts Tuesday that about 50% to 60% of the $200 million in cuts would come from compensation expenses.
"On the compensation side, it is primarily realigning our workforce to lower-cost locations and reallocating and reorganizing across our business to make sure we're investing in our highest capability," Ms. Dukes said.
"A significant element of the savings will be generated from realigning primarily our non-client-facing workforce to support key areas of growth," Ms. Dukes added.
However, Greg McGreevey, senior managing director, investments, said on the earnings call that some of the cost cuts will impact investment roles.
"The changes were really designed on the investment side to accomplish a couple of objectives. One is to enhance our investment teams and processes, so we can continue to drive performance. Two is to enhance and simplify our global equity offerings," Mr. McGreevey said. The cuts are also aimed at "reassign(ing) certain capabilities to stronger teams with frankly better processes and performance."
The firm's leadership assessed Invesco's global equity business and is "reassigning our Atlanta-based global core equity team to our Canadian global equity team, and then realigning that Canadian global equity team into our New York team," Mr. McGreevey said.
"It's going to simplify, not only our overall offerings and capabilities, but it's going to be able to streamline our messaging and our branding. … So it'd be those types of things that we're going to be doing under that umbrella of simplifying our global equity offerings," he added.
As of Sept. 30, Invesco's assets under management totaled $1.22 trillion, up 6.4% from three months earlier and up 2.9% from a year earlier. The firm reported revenues of $1.5 billion in the third quarter, up 5.5% from the second quarter and down 13% from the third quarter of 2019.
The firm had total net inflows of $11.3 billion during the third quarter.
The expense-cutting plan comes as Invesco faces activist investor pressure to explore strategic combinations with other firms in the asset management industry.
On Oct. 2, activist hedge fund Trian Fund Management said in SEC filings it had taken 9.9% stakes each in Invesco and Janus Henderson Investors, fueling rumors that the two firms might combine.
Invesco President and CEO Martin L. Flanagan mentioned Trian's investment in the business on the earnings call but declined to comment further on specific M&A speculation.
