AIM, Invesco Outflows Pull Amvescap Profits -7%
August 5, 2005
Amvescap, parent to the AIM and Invesco fund brands, indicated last Tuesday its second quarter profit had fallen 7% to 60.3 million pounds, or $106.9 million, from 59.1 million the previous quarter. Analyst consensus had forecast that figure at 62.2 million pounds.
A large factor draining Amvescap earnings has been steady fund outflows, driven by lackluster performance and the taint of the fund scandal, which cost AIM and Invesco $450 million in penalties and fees.
In the second quarter of 2005, Amvescap investors withdrew $5.7 billion in the second quarter, outpacing market gains, $4.5 billion of that alone coming out of AIM funds in the U.S. Nonetheless, AIM Distributors still ranks as the 15th-largest fund group, in terms of long-term, open-end funds, according to May data from Financial Research Corp.
Meanwhile, Canadian fund giant CI Financial at press time was said to have dropped a hostile Amvescap takeover, with the London Sunday Telegraph earlier reporting that CI had hired Fenchurch Advisory Partners and law firm Freshfields Bruckhaus Deringer to advise on a second bid, following its earlier offer on July 6.
Based in Toronto, Amvescap has a market capitalization of C$6.8 billion, or $5.6 billion, eight times the size of CI, which in Canada, is the third-largest mutual fund manager.
Rumors of a dropped bid pulled Amvescap shares down to 10.1% last Thursday on the London Stock Exchange, to close at 377.5 pence.
For its part, CI issued a statement saying it would not make a bid for Amvescap without approval of its board.
Amvescap's new CEO, Martin Flanagan, speaking yesterday on his first earnings call and just his second day on the job, noted that he spent 22 years of his life at his previous firm, Franklin Templeton, and avowed that he plans to spend the next 22 years at Amvescap.
Flanagan plans to draw on his company's core strength as an independent organization whose sole focus is investment management, as well as cut costs, improve earnings and grow revenues.
Outgoing CEO and chairman Charles Brady told analysts: "Amvescap remains focused on improving investment performance and maintaining the highest standards of client service." Brady noted that while pre-tax and operating profit have decreased in the first half of the year, the results nonetheless indicate "good growth."
In terms of Amvescap's first-half revenue alone, it was up 0.88% to $1.029 billion, from $1.022 in the first half of 2004.
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