Evergreen Investment Management Co. LLC is buying a majority interest in a London fixed-income institutional manager with operations in several overseas markets that would be new to the Wachovia Corp. asset management arm.
After buying the stake in European Credit Management Ltd., which has $26 billion of assets under management, Evergreen would have $286 billion of assets under management.
"We established a marketing effort out of London earlier last year and we really didn't have a marketing presence outside of London in Europe," Dennis Ferro, Evergreen's president and chief executive, said during a conference call Tuesday.
The privately held European Credit Management, established in 1999, has operations in Japan, Germany, Spain, Portugal, Northern Europe, Asia, and Australia. It has strong distribution through banks and insurance companies, and 20% of its assets under management are through pension funds in the United Kingdom, said Stephen Zinzer, its chief investment officer.
Mr. Ferro said his company "has a presence in Europe and Asia, but this combination gets us a presence in nine countries and really jump-starts our ability to market products overseas and allows ECM to utilize our distribution in the U.S."
The deal "is really a revenue-based global expansion for Evergreen," he said. "It gives us access to world market that would've taken us five years to achieve independently."
Evergreen, which is based in Charlotte, has an international fixed-income team in London, Evergreen International Advisors, that manages $17 billion of assets. The marketing division started in London last year is named Wachovia Global Asset Management.
Evergreen, which announced the deal Tuesday, did not disclose the price. David Carroll, the head of Wachovia's capital management group, said the Charlotte banking company expects the deal to be neutral to earnings this year.
Analysts said that the deal does not appear to be expensive and would not affect Wachovia's near-term earnings. They said it is consistent with the banking company's strategy of making selective, revenue-generating acquisitions to expand its international product offerings and distribution.
"This deal hits home at the fact that Wachovia's priorities aren't on making large domestic banking acquisitions but on fee-based revenue acquisitions," said Kevin Fitzsimmons, an analyst with Sandler O'Neill & Partners LP.
European Credit Management's 140 employees include 32 investment professionals. It had $4 billion of assets under management at the end of 2001, and its roster has quadrupled in size over the past five years.
European Credit Management would retain its brand and its management team, and its employees and strategic shareholders would retain a 30% equity stake in the firm.
Evergreen has bought two U.S. institutional asset managers in the past five years - J.L. Kaplan Associates of Boston in 2002 and Metropolitan West Capital Management of Newport, Calif., in June. Patrick J. O'Brien, its president, told American Banker in November that his company was looking for strategic acquisitions and organic expansion internationally.
Sandler O'Neill's Mr. Fitzsimmons said of Evergreen and Wachovia: "I think their main message overseas is that they are not trying to be all things to all people and expand just for the sake of expansion. They are looking for the right partners and acquisitions that play well with the strengths Evergreen has to offer and expand where it makes sense to expand."
The European Credit Management deal is subject to regulatory approval. It is expected to close this quarter.
