Invesco boss: All systems go for June 1 reboot

Invesco Ltd. plans to hit the ground running when its acquisition of Van Kampen Funds Inc. officially closes next Tuesday, Martin Flanagan, chief executive of Invesco, told InvesmentNews.
Invesco announced in October that it was acquiring the $119 billion retail money management unit from Morgan Stanley. Mr. Flanagan said managers at the fund firm have spent the past few months getting all of the back-office operations in place and reorganizing staff so that Invesco will be prepared to compete with larger rivals the day the merger is finalized.
That sort of systems integration and employee shuffle typically takes up to a year. But Invesco aims to have the conversion to one transfer agent (DST Systems Inc.,) finished by June 1 — a mere four months after the firm announced that it would combine the two companies into a single sales structure.
With Van Kampen in tow, the Atlanta-based Invesco’s U.S. mutual fund assets would have topped $200 billion as of March 2010, making it the 13th largest fund-management company in the country, according to Strategic Insight. Without including Van Kampen’s assets under management, the publicly traded Invesco ranked as the 17th largest mutual fund manager in the U.S. Globally, Invesco will manage $580.5 billion in assets and have 5,500 employees — including 700 investment professionals — located in 20 countries.
“We are ready to go head-to-head on breadth and depth [with the biggest players],” Mr. Flanagan said. “We recognize that all clients are different and don’t want investments delivered in the same way.”
Invesco’s wholesalers have all participated in a month-long training course on the firm’s combined product lines. Specifically, the firm wants to make sure that Invesco advisers are aware of the value-equity and municipal-bond expertise the firm has now through the Van Kampen acquisition, Mr. Flanagan said.
The publicly traded firm also plans to launch an advertising campaign in September to promote the Invesco brand, he said.
Invesco’s board and management will spend the next few months determining which funds will be merged, Mr. Flanagan said. Invesco expects to merge 12 Van Kampen open-end funds into its own, resulting in the combined organization having 190 open-ended funds and 32 closed-end funds.
The fact that Invesco has gotten all of the reorganization and back-office work out of the way is a big coup for Mr. Flanagan, said Geoff Bobroff, a mutual fund consultant. “It’s unusual for the board to commit to something long before they had approved the transaction,” he said. “But it makes the integration go much more smoothly and now they will be able to turn the lights on Tuesday and have everything up and running.”
What remains to be seen however, is how Invesco will set fees for its fund lineup once the two families are merged, said Ryan Leggio, a mutual fund analyst at Morningstar. A study released today by The Vanguard Group found that investors are directing between 55% and 93% of cumulative net cash flow into the lowest-expense quartile of funds in all five categories.
“Most of Invesco’s fees currently are below the median now,” Mr. Leggio said. “We will see if they are going to be as competitive.”

Related Topics: Invesco Ltd.