MARTIN Currie, the 130-year-old Edinburgh fund management company, has been acquired by giant US firm Legg Mason for an undisclosed sum.
The sale of the Scottish business ends a five-year period of repositioning and controversy which included regulatory fines and the first loss in its history.
It returned to profit last year, but Willie Watt, chief executive, revealed to The Scotsman yesterday that he had been in talks with Baltimore-based Legg Mason since last October about some form of partnership.
“The company was not for sale but I was looking for some form of distribution deal and Joe Sullivan [president and chief executive of Legg Mason] showed some interest in working with us. He wanted to become a partner and I could see some interesting options for us.”
Martin Currie will become an affiliate company under Legg Mason which has sold several businesses, created new products and bought other small investment firms as it tries to move beyond a long period of net quarterly withdrawals by customers.
Sullivan said the Edinburgh firm is a good fit as investors put more money into international stocks. “You have to have a global investment capability that reflects that demand,” he said.
Legg Mason’s Melbourne-based Australian equities unit, with £1.47 billion in assets under management, will become part of Martin Currie after the deal closes.
Privately held Martin Currie, which has about £5.77bn of assets under management, runs equity portfolios for clients across Europe, the Middle East, Asia and Australia.
The deal is expected to add slightly to Legg Mason’s earnings in the first year and is expected to close towards the end of the year.
Watt said the senior management at Martin Currie will remain with the business, which joins a large group of independent affiliate companies acquired by Legg Mason. These include Brandywine Global, ClearBridge Investments, The Permal Group, QS Investors, Royce & Associates and Western Asset Management.
Martin Currie has experienced five years of turbulence since being caught up in a conflict of interest issue involving one of its funds in China. The firm suffered an exodus of money after it was found guilty of the fraudulent use of client funds and fined by US and UK regulators.
In 2012 it reported a £9.3 million loss but last year returned an operating profit of £4.8m and said that confidence had returned to its Asian business. Watt said at the time that it would resume its strategy for growth. Yesterday he said the Legg Mason deal would enable the firm to accelerate that planned growth. Its tie-up with the Australian business would give both a broader range of options.
Legg Mason, which has $704 billion (£415bn) under management and is listed on the New York Stock Exchange, will provide Martin Currie with the distribution help that Watt was seeking and seed capital for new strategies.
Sullivan said: “Martin Currie’s active international equity capabilities fill our largest product gap and are a perfect complement to our existing investment capabilities.”
COMMENT, PAGE 35