Evergreen Investments Announces Agreement To Acquire European Credit Management
January 09, 2007 - BOSTON — Evergreen Investments, the asset management division of Wachovia Corp. (NYSE:WB), today announced an agreement to acquire a majority interest in privately held European Credit Management Ltd. (ECM), a London-based fixed income investment management firm with approximately $26 billion (€20 billion) in assets under management. The combined organization will have over $280 billion (€210 billion) in assets under management, serving more than 2,400 institutional clients and 3 million individual shareholders. Subject to regulatory approval, the deal is anticipated to close in the first quarter of 2007. Financial terms of the transaction were not disclosed; however, in 2007, Wachovia expects the transaction to be neutral to earnings per share on a GAAP basis and modestly accretive, excluding intangible amortization.
“Our alliance with ECM represents a significant advancement of Evergreen’s global asset management distribution capabilities by providing access to a well-established sales platform with a distribution network in nine countries and client relationships in 40 countries,” said David Carroll, head of Wachovia’s Capital Management Group. “As a long-standing client of ECM, we’ve been impressed with their highly successful track record and we’re thrilled to bring their expertise and management capabilities under the Wachovia umbrella.”
Dennis Ferro, Evergreen president and CEO added, “ECM’s unparalleled understanding of the European credit markets complements Evergreen’s existing fixed income capabilities, backed by a shared commitment to research, risk management, and producing long-term, sustainable returns. This partnership with ECM strengthens our expanding institutional business and allows both firms to offer a wide range of innovative, industry-leading investment solutions to clients across the globe.”
In particular, the partnership strengthens Evergreen’s presence in the London market, where the firm has an international fixed income team—Evergreen International Advisors—responsible for $17 billion in client assets, and a recently established business development and sales division—Wachovia Global Asset Management—for non-US market distribution opportunities.
ECM is rated AM2 by Fitch and has been named the winner of Global Investor’s Award for Investment Excellence as ‘European Bond Manager’ / ‘European Fixed Active Manager’ for the past three years. The firm, which will continue to operate under the ECM brand, has over 140 employees including 32 investment professionals and specializes in delivering portable alpha and unique customised credit products to institutional clients. ECM’s assets have grown from $4 billion (€3 billion) in 2001 to approximately $26 billion (€20 billion) today, and they have quadrupled the number of client accounts during this period.
ECM will retain its management team, led by Chief Executive Officer, Steven Blakey, and Chief Investment Officer, Stephen Zinser. Day-to-day portfolio management responsibilities will continue to be handled by the existing ECM investment team.
Following the close of the transaction, ECM employees and strategic shareholders will initially retain a 30 percent equity stake in the firm. In addition to the equity stake, a number of incentive and retention plans are in place to ensure that ECM continues to retain the best talent.
“An ECM-Evergreen alliance allows us to focus on what we do best—generating stable yet superior returns through highly customized, diversified portfolios of European credit securities—while capitalizing on the significant distribution capabilities of Evergreen and its parent company, Wachovia Corporation, particularly in the US,” said Blakey.
“Evergreen’s multi-boutique structure provides ECM the autonomy to continue to run its own highly successful investment process while benefiting from the additional resources of a complementary U.S. credit research capability,” added Zinser.
Evergreen is pleased to announce that ECM co-founder Stephen Rumsey has separately been engaged by Evergreen to provide strategic insight and guidance as the firm continues to broaden its global asset management business. Rumsey, who co-founded ECM in 1999, brings significant knowledge and experience of the fixed income markets and their important role in the global asset management industry.
Wachovia Corporation (NYSE:WB) is one of the nation’s largest diversified financial services companies, providing a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services. Including the Golden West merger, which closed on October 1, 2006, Wachovia has retail and commercial banking operations in 21 states with 3,400 retail banking offices from Connecticut to Florida and west to Texas and California. In addition, two core businesses operate under the Wachovia Securities brand name: retail brokerage with 737 offices in 49 states and with affiliate offices in Latin America, and corporate and investment banking in selected industries nationwide. Other nationwide businesses include mortgage lending in 39 states and auto finance covering 46 states. Globally, Wachovia serves clients through more than 40 international offices. Online banking is available at wachovia.com; online brokerage products and services at wachoviasec.com, and investment products and services at evergreeninvestments.com. At September 30, 2006, Wachovia had assets of $559.9 billion (€423 billion) and market capitalization of $88.2 billion. On the same date, based on pro forma data, Wachovia’s combined assets were $706 billion and combined market capitalization was $107 billion.
Evergreen Investments is the brand name under which Wachovia Corporation (NYSE:WB) conducts its investment management business. Wachovia Global Asset Management is the brand name under which Evergreen Investments conducts sales and distribution business outside of the United States. Combined, the groups serve more than three million individual and institutional investors through a broad range of investment products. Led by 300 investment professionals, Evergreen Investments strives to meet client investment objectives through disciplined, team-based asset management. Evergreen Investments manages approximately $258 billion (€195 billion) in assets (as of September 30, 2006). Please visit EvergreenInvestments.com for more information about Evergreen Investments.
Founded in 1999 at the inception of European Monetary Union and in anticipation of the rapid development of the Euro denominated credit markets, European Credit Management has €20.0 billion in assets under management, invested in European corporate bonds, bank capital, European emerging markets and asset-backed securities, as well as leveraged loans. Based in London and authorized by the FSA, it has a rating of AM2 from Fitch Ratings. For the last three consecutive years, it was been the winner of Global Investor’s Award for Investment Excellence as ‘European Bond Manager’ / ‘European Fixed Active’ Manager. At year end April 30, 2006, ECM reported revenues of £63.4 million ($126.9 million) and post-tax earnings of £17.2 million ($37.4 million).
Goldman Sachs International, which is regulated by the Financial Services Authority, is acting for European Credit Management and no one else in connection with the Transaction and will not be responsible to any person other than European Credit Management for providing the protections afforded to clients of Goldman Sachs International or for advising any other person in relation to the Transaction or any other matter referred to in this announcement.
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