It has often been observed that investors can make more money by buying shares in fund management companies than by buying their funds.
On this basis, Affiliated Managers Group, a US quoted company with $231bn under management, could be a particularly good investment. It holds stakes in a range of asset management boutiques, taking a share of revenues in return. Today, it revealed a deal with Artemis Investment Management, the UK-based fund manager that has passed through the hands of ABN Amro and Fortis Investments (now a subsidiary of BNP Paribas).
AMP has taken a majority stake in Artemis, with the boutique’s management team acquiring a “substantial” equity ownership. AMG has not disclosed the terms of the transaction.
From Artemis’s point of view, this is as good as being independent – perhaps better as the group gains a committed business partner that will leave it alone to get on with managing money. It is certainly better than taking private equity money, according to Mark Tyndall, chief executive and one of the founding partners, as there is no debt involved, and no need for further transactions down the line.
Artemis will become a partnership once more. “We are turning our backs on the public markets,” says Mr Tyndall. Partnerships are unfashionable in the traditional asset management sector, he adds. But the structure suits Artemis. Partners wanting to cash out can be accommodated on an individual basis, he says.
The change of ownership resolves the uncertainty that has dogged the group since the bidding battle for ABN Amro broke out just before the credit crisis hit. Consultants put it on hold, so it could not raise institutional money. Retail flows have been positive, but not huge as the group did not have products in the hot investment areas.
Mr Tyndall was inspired to set up Artemis in 1997 with three colleagues from Ivory & Sime partly by seeing the profits the UK equity team he headed had made by investing in Perpetual and Jupiter. Affiliated obviously has a similar view. It runs a sort of fund of fund managers, which is probably a much better bet than the average fund of funds.