Amvescap: jumping ship

Amvescap [AVZ.L] has admitted defeat in its aim to build a European wealth management business based around the Atlantic Wealth Management operations. Despite attempts to rejuvenate the business, Amvescap has finally drawn a line under the whole affair by accepting SFIM's [SFL.L] offer for its UK business.

London based Singer & Friedlander Investment Management (SFIM) has announced an agreement to acquire the UK and Jersey based businesses of Atlantic Wealth Management and Atlantic Wealth Management International. The businesses are currently wholly owned subsidiaries of Amvescap, forming part of the company's wealth management arm Atlantic Trust.

Specializing in discretionary fund management for private clients, the businesses' managed funds were worth GBP800 million at December 31 2003. The price for the acquisition has been set at 2.5% of the total asset value, or approximately GBP20 million. As part of the deal, SFIM will continue to employ the existing Atlantic staff, with SFIM chief executive Richard Killingbeck to oversee the new business.

Atlantic Wealth Management and Atlantic Wealth Management International were only purchased and integrated by Amvescap in June 2002. Until then, the majority of Amvescap's operations were focused predominantly on the retail and asset management sectors. The operations were intended to form the focus of the company's ambitious European wealth management activities.

However, this aim has proved quite unachievable. Since 2001 the wealth management and retirement division has failed to achieve profitability and this has been further demonstrated in the most recent results. The division recorded a loss of GBP3.3 million for the full-year 2003, while the Atlantic Wealth Management and Atlantic Wealth Management International businesses made a loss of GBP717,000 before tax and exceptional items.

Considering the poor results and long-standing rumors of discontent and unrest among staff, the disposal was not completely unexpected. However, it seems that until very recently hopes were still running high for a recovery. Only last month, Atlantic Trust announced the appointment of Mark Richardson to head up the London based operation, emphasizing his "enviable track record in building businesses over the last 30 years". It therefore appears that SFIM's offer simply represented an opportunity for Amvescap to cut its losses and run.