(Pictured: Kimon Kouryialas)
Martin Currie, the Edinburgh-based global manager, is to integrate the Australian equities business of Legg Mason in a deal announced in the UK last night. The deal involves Martin Currie becoming a wholly owned affiliate of Legg Mason.
Kimon Kouryialas, Martin Currie’s director of Pan Asia sales and client service, said completion of the new arrangement was expected in the fourth quarter this year, subject to regulatory approvals.
Coincidentally, Kouryialas is a former business head of Legg Mason based in Australia.
He wrote to clients last night saying: “As part of the transaction, Martin Currie will integrate Legg Mason’s Australian Equities (LMAE) investment business. Led by Reece Birtles, this team of 14 manage close to A$3 billion on behalf of institutional and retail clients and will add immeasurably to our existing footprint in Asian markets.”
Listed on the New York stock exchange, Legg Mason has a market capitalisation of approximately US$6 billion and assets under management in excess of US$700 billion. A holding company for asset management companies with market-leading wealth-management distribution, its affiliate business model provides clients with a broad spectrum of equity, fixed income, liquidity and alternative solutions.
Kouryialas said Legg Mason had a strategic gap in international equities and Martin Currie would become the flagship and dedicated active international-equity business within the group.
He said: “At the start of 2010 we announced our long-term strategy to the marketplace. The plan re-shaped our business exclusively on active international equities, with a focused range of absolute, relative and income strategies. We are pleased to add Australian equity expertise to our capabilities. The plan was designed and implemented by our current management team and has created an improved business, with a growing reputation and asset base. Today, our client base is truly international, with a balanced spread across Australia, Asia, EMEA and the US. We manage money for a diverse range of clients including superannuation funds, sovereign-wealth funds, foundations, endowments, charities, family offices, public and corporate pension schemes.
“While 2013 was a year of solid growth and progress for Martin Currie, the potential of our business is far greater. To help realise this, we sought a strategic partner who is appropriate for the next phase of our development. We believe Legg Mason more than meets our requirements. The partnership will allow us to grow our strategies further with efficient access to many new markets through Legg Mason’s market-leading wealth-management distribution proposition, as well as valuable seed capital for new product initiatives, allowing Martin Currie to be at the forefront of innovative product development.
“Legg Mason’s affiliate model ensures its subsidiaries operate with full autonomy. Martin Currie will continue to be managed in exactly the same way and with the same management team. We will continue to implement our long-term strategy, maintain our investment process, business infrastructure, client-service and company culture, ensuring absolutely no change in our offering to clients.
“This new partnership enables our long-term investors – Crestview Partners, RIT Capital Partners Plc and other interests associated with Lord Jacob Rothschild – to realise their investment. It also removes all debt from the balance sheet, providing a stronger foundation for our long-term growth. We believe the terms of the Legg Mason transaction are attractive to the management and shareholders of Martin Currie and our senior management team has signed new long-term contracts. Equity-based incentive pools have been created, linked to the long-term growth in value in the company, giving further assurance regarding our ability to retain and win new talent to the firm.
“Following completion of the transaction, Martin Currie will integrate Legg Mason’s Australian investment business. Led by Reece Birtles, this team of 14 manage close to A$3 billion on behalf of institutional and retail clients and will add immeasurably to our existing footprint in Asian markets. With their fundamental stock-picking approach, Legg Mason Australian Equities is a complementary fit with Martin Currie’s investment approach. By integrating the team into Martin Currie, it will benefit from access to the global investment resources of Martin Currie, while continuing to manage its investment strategies with an unchanged investment approach.
“We continue to serve all our institutional client and consultant relationships in Australia as before, with no changes in personnel or processes.
“For wealth-management relationships, we will now work with Legg Mason on ensuring the best delivery of these services, with Legg Mason taking the lead given their deeper resources and infrastructure.
“Over the years, many firms have wanted to partner with our business. We have always rejected these approaches as none of the firms would allow our business to flourish in an autonomous fashion and ensure that the client proposition was unaltered. Legg Mason is the exception. Clients are at the centre of everything we do and this partnership gives us investment and business autonomy, ensuring our client proposition remains unchanged.
“We are pleased to welcome Reece Birtles and his team to Martin Currie and are excited about the potential success of this newly-combined enterprise. They bring a bottom-up fundamental approach to Australian equity investment, which we believe will work well alongside our own approach to active bottom-up investment.
“Legg Mason has a clearly-defined affiliate model with a proven track record of its investment-management companies running with full autonomy to develop their businesses. This, linked to a very similar culture to ours and a senior management team that we trust and respect, we believe, leads to a very powerful proposition for our clients.
“The transaction enables us to remove the uncertainty around our ownership, remove all debt from the balance sheet and has the full commitment and support of our senior team of investors. With new long-term incentive plans being put in place, we retain our strong foundations and can build further on this to help us meet and exceed our clients’ objectives.”