Liberty Financial Cos. struck again Thursday on the acquisition front, announcing a deal to buy Societe Generale's U.S. investment arm for up to $216 million.
The purchase of Societe Generale Asset Management Corp., New York, would bring the Boston financial services company $5 billion of assets under management and would round out its product roster with respected international and global mutual funds.
"They now have the capability somewhere within the Liberty family to manage pretty much any style of money," said Geoffrey H. Bobroff, a mutual fund consultant in East Greenwich, R.I.
"We feel we got one of the premier global investment companies in the United States, and there are not many," said Kenneth R. Leibler, president and chief executive officer of Liberty. "This really rounds us out in terms of giving us a full global capacity."
The deal, Liberty's third for an asset management company this year alone, reflects twin trends in the mutual fund industry: Firms are using acquisitions both to build scale and to enhance product lines.
In the last three years, Liberty has methodically expanded its range of funds with acquisition after acquisition of companies including Colonial Group and Newport Pacific Management. Those acquisitions have helped the company more than double its assets under management since 1995.
Liberty's powerful distribution machine is expected to boost assets at SoGen Asset Management, which lacked the scale and sales network to be a major player, industry watchers said.
The deal, expected to close late this year, would boost Boston-based Liberty's assets under management to more than $65 billion. The purchase is to be made with 96% in cash and 4% in new shares of Liberty common stock; the ultimate price depends on meeting growth objectives.
Early last month, Liberty announced plans to buy Progress Investment Management Co., a San Francisco-based pension fund management company with $2.5 billion of assets. In June, Liberty unveiled a deal for Crabbe Huson Group, Portland, Ore., which manages $5.3 billion of assets.
Liberty executives said the company's strong distribution network should let it significantly expand the new subsidiary's book of business.
Liberty gets a highly regarded international fund business with a value- investing orientation to complement its existing funds.
Liberty products include value-oriented domestic funds through Colonial, domestic growth funds through Stein Roe, and Asian growth funds through Newport.
Societe Generale Asset Management-whose name is expected to change after the deal closes-is led by Jean-Marie Eveillard, its principal portfolio manager.
Mr. Eveillard and his three-person team of money managers have signed five-year contracts to continue running the company, a SoGen Asset Management spokesman said.
The firm's most popular fund is its SoGen International fund, a hybrid product with $3.7 billion and a four-star rating from Morningstar Inc.
Its $1 billion SoGen Overseas fund, a foreign stock fund, has a three- star rating; its SoGen Gold fund, a precious-metals specialty fund, has just $26 million of assets and a two-star rating.
Though turmoil in international markets has dragged down performance in recent months, SoGen has a long track record of outpacing its peers.
Last year, for instance, the SoGen International fund had a return of 8.54%, which trailed the Standard & Poor's 500 index badly but did beat funds in its peer group by 7.18 percentage points, according to Morningstar.
Societe Generale in May said it planned to sell its U.S. money management arm as part of a plan to exit the retail business in the United States and expand its institutional business.
Industry watchers said the sale also reflects a strategic adjustment by the French bank to de-emphasize money management in this country in favor of investment banking.
The bank has spent more than $500 million this year buying two New York- based investment banking boutiques, Cowen & Co. and Barr Devlin.
"They were not as committed to the U.S. market as you need to be to be succesful," said Thomas W. Courtney Jr., president of Courtney Group Inc., an investment banking firm in New York.
Mr. Eveillard and his colleagues own 20% of the asset management business, and Societe Generale owns the rest.
Along with boosting distribution, the new corporate parent would relieve Mr. Eveillard and his colleagues of administrative duties, letting them concentrate on investment management.
Mr. Eveillard's operation would remain a separate operating subsidiary, affording it the kind of autonomy in culture and management style that other Liberty units enjoy.
SoGen Asset Management's funds would be distributed by Colonial through brokerage firms, banks, and financial planners.
