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Rating:Liberty Mulls Sale Not Rated 3.0 Email Routing List Email & Route  Print Print
Wednesday, November 01, 2000

Liberty Mulls Sale

Reported by Sean Hanna, Editor in Chief

Liberty Financial is the latest fund firm to go on the block. The company has hired CS First Boston to review the options that it has going forward, including a possible sale. The firm also announced that it has sold the Private Capital Management division of Stein Roe & Farnham.

Liberty Financial is seventy percent owned by Liberty Mutual. It, in turn, is the owner of Stein Roe, Crabbe Huson and Wanger Asset Management. All together it manages roughly $37.9 billion in fund assets. The firm also said that it revamping aspects of its fund business and expects to save $7 million in expenses from the moves.

The firm has been restructuring its funds to combine smaller and overlapping funds and to rebrand its offerings. It added that it will centralize the finance and administration, human resources, legal and compliance, and communications of its asset management units to achieve further savings.

The buyers of the Private Capital (PCM) group at Stein Roe included the management team of the group and an outside investor group. It will retain the firm's mutual fund and institutional businesses. The $40 million sale will drop $13.8 million to Liberty's bottom line when it closes.

"While PCM has enjoyed strong growth in its assets under management, the profit contribution to Liberty Financial has remained unacceptably low. Because of its business model, we believe that PCM cannot generate meaningful economies of scale and competitive margins in a public company setting," said Gary L. Countryman, president and CEO. He added that the unit currently represents approximately three percent of Liberty Financial's pre-tax operating income.

Liberty's share price rose 33 percent on the news to $36 per share. The reported potential price of a deal is $45.  

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