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Friday, July 15, 2011

Thomas Talks About American Century's Soon-to-Be Shareholder

Reported by Armie Margaret Lee

Friday morning brought word that a 41 percent stake in American Century Investments is moving to the hands of Canadian firm CIBC from JPMorgan, which has held a non-controlling interest since 1998. Click here to see related story.

Jonathan Thomas
American Century Investments
President and CEO
During a conference call this morning, an analyst asked why American Century and JPMorgan are moving apart.

"The transaction with JPMorgan was originally struck 13 years ago," noted American Century Investments CEO Jonathan Thomas, who took part in the phone call from Lake Tahoe, where the American Century Celebrity Golf Championship is being held. "At that time, we were very much a retail manager, they were very much an institutional manager. Over the intervening time period, we have become extremely institutional in our orientation and at the same time, they've built up a very strong retail and intermediary capabilities."

"Our interests have somewhat diverged," he said. "When we look at the CIBC relationship, we see it as a completely complementary relationship with our existing business as well as our forward-looking goals."

Sought for comment on the transaction, a JPMorgan spokesperson wrote in an e-mail: "This is an investment made by J.P. Morgan Chase & Co. in 1998, and American Century has exercised its contractual rights to repurchase the non-controlling financial interest and has done so through a third-party, Canadian Imperial Bank of Commerce."

When $848 million, all-cash transaction is complete, CIBC will have a 41 economic interest in American Century. The Stowers Institute for Medical Research owns 43 percent and the remainder is owned by employees. The deal is expected to close in the next 60-90 days.

During the conference call, Thomas said American Century is expecting around a five percent organic growth in assets, net of markets. The industry in the U.S., he said, generally projects around a 2 to 2.5 organic growth rate.

"We are up just about $4 billion so far this year on net investments into the firm as of yesterday morning," Thomas said.

Last year, American Century saw $6.1 billion in net investments, making 2010 the best year in the company's 53-year history.

In a phone interview with The MFWire.com, Thomas said the company "has been pursuing a strategy of growth through diversification."

The deal, he said, enables American Century to tap into one of the largest banks in Canada. "It gives us access to nearby, but still non-U.S. market." He added that American Century and CIBC "share an ambition to grow internationally outside of North America."

American Century has offices in Hong Kong and London. 

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