Another fund group down. Bank of America said today that it purchased the portion of Marsico Capital Management, LLC that it did not already own for $950 million. The total price tag on Marsico was $1.1 billion when the cost of options for 50 percent of the firm is included. The options were issued in 1997 at Marsico's founding and exercised in February 1999.

At first blush the price tag appears quite hefty compared with recent deals. Bank of America is paying $950 million for half of Marsico's $15 billion -- or 12.6% of assets under management. Recent deals have typically run in the 4 to 5 percent of assets range. Calculate the price by Bank of America's math and use the total price of $1.1 billion and the bill still works out to 7.3 percent of assets.

Chief Executive Thomas F. Marsico, 44, founded the Denver-based firm after he left Janus where he was manager of the Janus Twenty. Marsico has been one of the fastest growing fund firms on record adding $15 billion in assets since its founding in 1997. This includes $4 billion in its three no-load funds: Focused Equities, Growth & Income and Twenty-First Century. Marsico will launch a fourth fund, The Marsico International Opportunities Fund, on Friday.

The Denver-based investment manager also acts as subadvisor on products for Skandia, Sun America, Frank Russell, and Enterprise.

Unlike other recent deals such as Liberty's purchase of Wanger and Old Mutual's purchase of UAM, these deal was the likely end of Marsico from day one. Bank of America (then NationsBank) assisted Marsico with a strategic investment in the firm and has distributed load versions of the Marsico funds. Marsico acts as subasdvisor to: Nations Marsico Focused Equities Fund, Nations Marsico Growth & Income Fund and Nations Marsico 21st Century Fund.

Bank of America stressed that its increased stake in Marsico -- it will now own 100 percent of the fund manager -- will have no impact on the day-to-day operations or investment philosophy of Marsico. The transaction is expected to close in early 2001 pending regulator and shareholder approval.

It will also have little impact on its distribution strategy, according to the spokesperson. Bob Lojkovic, executive vice president of marketing will remain focused on subadvisor relationships and continue working with wholesalers of entities to which Marsico subadvises. Ken Johnson, vice president, insitutional account management will continue to work with consultants and institutional clients.

"This investment is a great opportunity to accelerate our corporate growth in this high-potential arena and reflects our commitment to building our asset management business," said Kenneth D. Lewis, president and chief operating officer at Bank of America. "Tom Marsico and his investment teams have extensive experience in managing growth portfolios for more than a decade. This is a partner we know well. Marsico Capital Management has a unique niche and an excellent reputation that will be enhanced by the Bank of America distribution capabilities."

"Marsico Capital Management will continue to operate as we do today, benefiting as Bank of America expands distribution capabilities," said Marsico, chairman and chief executive officer. "Our colleagues at Bank of America have worked well with me and my team since the inception of Marsico Capital Management, and our reputation helps Bank of America market its investment capabilities to financial intermediaries and institutional clients while allowing us to concentrate on what we do best -- growth investing."  

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