The president of Evergreen Investment Management Co. LLC's institutional arm is aiming for much faster new-asset growth next year as the Wachovia Corp. unit continues to use a multiboutique strategy to attract investors.
The Charlotte company has increased its institutional assets under management by 45.3%, to $145.3 billion, since 2001 when Patrick J. O'Brien became president and adopted the multiboutique approach.
In the past five years institutional asset management has become a more significant part of Evergreen's overall business. When Mr. O'Brien joined the company from a similar post at Bank One Investment Advisors, institutional assets made up 38.7% of Evergreen's $210.1 billion under management. This Sept. 30, however, institutional assets accounted for 69.2% of the company's $258.2 billion under management.
"Evergreen used to be a retail fund complex with some institutional capabilities," Mr. O'Brien said. "Now the institutional group is the largest channel that the firm operates."
In 2001, Evergreen's institutional arm added 24 clients and $9 billion of new assets. Through the first three quarters of this year, it has added 300 clients with $18 billion of new assets.
Mr. O'Brien said in an interview last week that he wants to significantly increase that growth rate, with new-asset growth of 30% next year.
"We'll grow at an equal or greater rate to what we have established, or I won't be in this seat next year," he said.
Sustained growth would require looking for both strategic acquisitions and organic expansion opportunities in the United States and internationally, Mr. O'Brien said.
"We want to penetrate markets here in the U.S. and look for ways to accelerate growth in Europe and move into the Asian-Pacific region as well," he said. "The bank parent has done the same, so to some extent we are leveraging off some ground that they have forged for us, and that gives us a strategic advantage against our competitors. The bank has established correspondent banking relationships overseas that they have built over time, and we believe that there is an opportunity to leverage that."
Mr. O'Brien said that, though other providers, including banks, have adopted a "one-brand" approach to institutional asset management, Evergreen has eight investment platforms focused on specific investment styles. It also offers distribution, client services, regulatory oversight, technology, and "anything else that can get in the way of these investment professionals," he said.
The multiboutique approach has succeeded because "clients want to do more with fewer providers," he said.
"Institutional clients want vendors to provide more expertise and provide more solutions to their problems," he said. "This architecture that we have brings together a lot of divergent capabilities, and it has been really well-received by our client base."
Analysts said Evergreen is well positioned to continue buying small institutional asset managers because its multiboutique platform lets acquired firms remain relatively autonomous. In the past five years, it has bought two institutional asset managers - J.L. Kaplan Associates of Boston in 2002 and Metropolitan West Capital Management of Newport, Calif., in June.
"The key to acquiring quality institutional managers with strong track records is to allow them to maintain their autonomy while reaping the distribution and client services benefits of being associated with a large corporation," said Burton Greenwald, a Philadelphia analyst at B.J. Greenwald Associates.
Evergreen is not alone in employing the multiboutique approach, analysts said. Providers including Legg Mason have adopted it, too. Mr. O'Brien said this strategy has made Evergreen an attractive acquirer. His company would like to make more deals, he said, specifically to develop alternative investments for institutional investors.
"The alternative space is a different product that requires a different expertise," he said. "There is a significant learning curve, and it may be easier to acquire here than to build this organically."
Mr. O'Brien said Evergreen has steadily increased its assets under management in the past five years and he is confident that this growth can persist.
"Evergreen and Wachovia are committed to the institutional business and the asset management business in general, and that really allows us to focus on finding innovative ways to grow," he said.
