Invesco eyes greater U.S. presence through Morgan Stanley deal

By Péralte C. Paul

The Atlanta Journal-Constitution

Invesco expects to boost its profile in the United States and beef up its client offerings through its acquisition of Morgan Stanley's retail asset management business in a $1.5 billion cash and stock deal.

The deal, announced late Monday, gives Atlanta-based Invesco a business – which includes Morgan Stanley’s Van Kampen Investments unit -- with $119 billion in assets under management.

Morgan Stanley, based in New York, gets a 9.4 percent stake in Invesco in exchange for $500 million cash and 44.1 million Invesco shares worth about $1 billion.

“We’re really excited about this acquisition,” Martin L. Flanagan, Invesco’s president and chief executive, said in a conference call with analysts Tuesday.

“We see it as an opportunity to enhance our client needs; we see it as a real opportunity to significantly strengthen our presence in the U.S. market,” Flanagan said.

The transaction is expected to close by the middle of next year.

Invesco, which manages $417 billion in assets already and is Atlanta's largest investment management firm, said the acquisition fits in with its four-pronged, long-term strategy.

That includes expanding its portfolio of investment products and capturing a greater share of the U.S. market by leveraging its size and touting its breadth of investment teams. It also includes looking for opportunities to increase and deepen existing client relationships and build its presence in Japan's investment management market.

In the U.S. for example, Morgan Stanley manages about $30 billion in U.S.-based value stocks compared with Invesco's share of $5 billion.

In Japan, Invesco's share of equities under management totals $2 billion vs. Morgan Stanley's $6 billion.

The news likely helped Invesco's shares to rise -- they increased nearly 2 percent by early Tuesday afternoon -- despite the company's announcement that third-quarter profit fell more than 27 percent.

The company reported a profit in the quarter ended Sept. 30 of $105.2 million or 24 cents per share, compared with $131.8 million or 33 cents per share in the year-ago quarter.