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Robertson Stephens returns to roots

After selling itself to Bank of America in October of 1987, Robertson Stephens Investment Management, the investment management unit of Robertson Stephens & Company, will return to private ownership. A group of investors led by G. Randy Hecht, the current president and ceo and other senior managers agreed to take private the San Francisco-based investment manager with approximately $4 billion under management for an undisclosed sum.

The repurchase is expected to close during the first quarter of 1999. Hecht will serve as the firm's new chairman and ceo and, according to a November 20th online letter to Robertson Stephens shareholders, several senior managers will remain in place. The corporate name will be shortened to RS Funds, to simplify the brand name, said the letter.

Bank of America announced this past May that it would sell the investment banking portion of the 14-year-old firm to BankBoston. That sale was completed in August. Then in June, Bank of America announced its intent to sell the money management unit citing preparations for its then-anticipated merger with NationsBank. According to Bank of America spokesperson, Jack Houseman, Bank of America had been in discussions with a number of interested parties since then, though he declined to name potential bidders.

The decision to sell Robertson Stephens Investment Management was made when it was determined that there would not be a strategic fit with Bank of America, said Houseman. There was an overlap in mutual fund products and there were significant differences in both the marketing and distribution approaches of the two firms' mutual funds, Houseman said. The no-load family of ten Robertson Stephens funds with about $2 billion under management is sold through three distinct sales channels: direct to investors, through fund supermarkets such as those of Charles Schwab and Fidelity and through several wrap programs offered in the broker/dealer channel. Another $2 billion is managed for institutional accounts, hedge funds, private partnerships and sub-advised accounts. But the recent letter to mutual fund shareholders reveals that the splitting up of the two firms may have resulted, at least in part, from a clash of cultures between a small but fiercely entrepreneurial firm and a large, soon to become larger public corporation.

"Freed from the distractions that come with being part of a very large organization, we can return to our roots as a solid privately-held firm and focus on what we do best," said Hecht in the letter.

The letter also suggests that other employees may get ownership stakes in the firm.

"Our goal will be to extend ownership widely among the entire firm," the letter said.