Investment Week talks to chief executives mark tyndall and tom cross brown about artemis-abn merger and the next move for the combined group
After all the guessing about who ABN Amro would appoint following the loss of its two star fund managers to Framlington and their subsequent walk out last month, the group has announced it will merge with Artemis.
The boutique and its well-known UK fund managers will now take on the management of ABN Amro's retail funds.
Following this announcement, Investment Week talked to the chief executives of both groups, Mark Tyndall from Artemis and Tom Cross Brown at ABN Amro, about the exact details of the merger and what it means for the two businesses.
Mark Tyndall, chief executive, Artemis Investment Management
How are you going to be able to manage the Artemis UK Growth Fund, ABN Amro UK Growth and run a £2bn business at the same time?
For me, it will not be any different from what I was already doing, running Artemis UK Growth and a £1bn retail business. I spend two-thirds of my time running money and that is not going to change. The management and sales and marketing team we already have will now have more people reporting to them, with the addition of ABN Amro's sales and distribution team, so that will make things easier.
Will this merger take your eye off the ball as far as the running of funds is concerned?
You just have to look at the performance of our funds at present to see that this will not be the case. The Artemis funds are performing well, both year to date and month on month. I have always felt that corporate distraction is a cover for other groups to hide under when their funds are doing badly during a merger. Our funds are in great shape and there will be no corporate distraction.
Will Artemis' style be affected by the larger funds under management?
Our style will not be affected at all. We have six managers at Artemis who will be taking on funds formerly run by two managers at ABN, so we are very capable of handling the extra money coming in.
After the break down of the New Star deal with Artemis you said there was no need to merge, as Artemis was big enough on its own. What has changed?
There has been no change. I said at the time concerning New Star, that our culture at Artemis would not survive the merger of the two businesses.
The set of circumstances with ABN lets us keep our culture intact, in that we remain an owner-managed business. We are bringing in the ABN sales and distribution support but leaving the Artemis business independent in an owner managed entrepreneurial culture.
Can you successfully run a business from Edinburgh and London?
The Artemis business will remain in Edinburgh but it will have an enhanced presence in London. This is the way we have operated for five years and it has done us no harm.
Will Artemis' London office go or will it be merged with ABN?
We will not be in two different offices for very long. However, as yet, we are not sure what our space requirements are and what offices we will use as our base.
What is going to happen to your managing director Jamie Campbell?
During a merger there are going to be any number of individuals whose roles will have to be amended, as two people cannot do everything. While there will have to be changes to certain job descriptions, there are plenty of jobs around. This is not a cost-cutting deal, it's a deal for growing the business.
Will fund ranges be merged or kept separate?
Clearly, we have got to look at the best way to position the combined product range. We are talking to key intermediaries and clients and getting their opinions as to whether they think changes should be made ' and, if we do make any, they will need unit holder approval. It will take several months to establish what people want to do.
What is the basis of the incentive deal to keep Artemis and ABN key managers in place?
We do not offer incentive deals and never have done. If you are a shareholder in a private fund management company, there is no additional or greater incentive to have to stay with that company because if you leave your shares become worthless whereas if you stay your shares can grow with the company.
Was this deal in place before Thomas and Luckraft announced their departure?
The initial approach for this deal was made two months ago when both first announced their resignations from ABN and it has been put together over the last three weeks after their much publicised walk out.
Tom Cross Brown, global chief executive, ABN Amro Asset Management
Did Thomas and Luckraft leave ABN because they knew a deal with Artemis was on the horizon?
No. Our first conversation with Artemis was when Thomas and Luckraft handed in their notices at ABN and discussions became really concrete after their extraordinary departure on 22 May.
How much has the deal cost?
Both myself and Mark Tyndall have agreed to keep the cost of the deal confidential.
Why has the ABN Amro brand gone rather than Artemis'?
Over the past three or four years both groups have built up, from scratch, very good reputations in the UK retail market and we have both built up brands which are respected. We did discuss three options, one was to keep the Artemis name, one was to keep the ABN Amro name, and the other was to combine the two. We fairly quickly decided there was no point in the combination, as it is better to have one clear proposition and avoid confusion. We did not want to have four As in the title of our business, (ABN Amro Artemis Asset Management).
There is a very good reason for keeping Artemis. A brand name in the UK retail market is very closely associated with the actual portfolio managers, so you could argue that Thomas and Luckraft and ABN Amro are sort of interchangeable. In the same way the Artemis fund managers are very closely identified with the Artemis name.
Another reason is that at the end of the day I am paid to take hard business decisions and it seemed to me that the right thing to do was to retain the Artemis name. Of course, it is with sadness to give up the ABN brand, but I am not paid to be emotional.
Does this deal give ABN and Artemis the base to alter parts of the retail market it currently targets?
I would be very surprised if, in order to meet the high ambitions that both Tyndall and I have for the business, the product range is not increased over the years in a controlled, intelligent and sensible way. It is Tyndall's shout as he is the chief executive, but I think it will happen.
Will ABN now look to try and pick up more institutional clients?
We have an institutional business offering specialist mandates and we have been winning business recently. Our assets in the institutional side are about £1bn and we want that to grow, under the ABN name.
Will the new retail business be interfered with that from Holland?
The UK retail market, in unit trusts and Oeics, is for Artemis, so we will not do that at all. Why should we? We have a 58% interest in what we believe will be a good firm, so why muddy water with a rival offering?
Artemis fund managers are not able to invest their own money directly into equities ' they have to go through one of Artemis' own funds to get access to it. Will this ethos remain the same when the two groups are merged?
Yes. I fully support Tyndall's belief on this one and it will not be changed until Tyndall himself wants to change it.
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