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Invesco values its funds at $150bn

Peter Rodgers Financial Editor
Monday 04 November 1996 19:02 EST
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Invesco said yesterday it was creating one of the largest fund management groups in the world, controlling $150bn (pounds 91bn) of funds, following agreement yesterday to take over the Texas-based AIM for $1.6bn.

The deal values the 72 per cent of the mutual fund group held by AIM founder directors and management at pounds 720m and creates a group in the same league as Mercury Asset Management, Britain's biggest independent fund manager.

Four top executives of AIM, including Ted Bauer, the 77-year-old founder, are to be locked in with four-year fixed- term contracts which will then convert to one-year rolling contracts. Mr Bauer's stake in AIM is worth about pounds 110m and he will end up with 5 per cent of the merged company.

In total, seven of the AIM directors will together hold a 20 per cent stake in the merged company, to be named Amvesco, and they have agreed not to sell their stakes for five years.

The announcement revealed that Invesco was notified last month that it was being investigated by Imro, the fund management regulator, for possible breaches of rules which "should be the subject of disciplinary proceedings".

Invesco said it had notified the breaches to Imro and they related to technical requirements for bank accounts and to written compliance procedures. It added that there was no loss to clients and any penalties would not be material.

One British analyst described the AIM mutual fund business as America's nearest equivalent to Perpetual, which is a fast-growing British unit trust business with a reputation for innovation

Invesco is paying with $1.1bn worth of new ordinary shares with the other $500m to be raised in cash from loans and a proposed one-for-five rights issue, which is expected to raise more than pounds 100m.

AIM shareholders will own about 45 per cent of the enlarged group, and all of them - including TA Associates, a US venture capital firm which will hold 12 per cent of Amvesco - will be restricted for at least a year in selling their stakes.

A majority of AIM shareholders have agreed to the proposal, which Invesco said would be broadly neutral for its earnings per share next year.

Mr Bauer said there was no plan to switch the company's main stock market quote from London to the US, although he confirmed that the deal raised the proportion of the business in the US from 90 per cent to 95 per cent.

Invesco has already switched its business heavily across the Atlantic under its chairman, Charles Brady, who is based in Atlanta.

But Mr Brady said that Invesco still had 50 per cent of its shareholding in London.

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