Invesco Fourth-Quarter Profit Rises as Takeover, Market Rally Lift Assets

Invesco Ltd., owner of the Invesco, Van Kampen and PowerShares funds, said fourth-quarter profit increased 58 percent, helped by its purchase of Morgan Stanley’s mutual-funds business in June and rising equity markets.

Net income rose to $175.2 million, or 37 cents a share, from $110.9 million, or 25 cents, a year earlier, Atlanta-based Invesco said in a statement today. Excluding some items, earnings of 44 cents a share beat the average estimate of 40 cents in a Bloomberg survey of 18 analysts.

“It was a mixed quarter for Invesco as it relates to flows” because proposed fund mergers stemming from the acquisition lead to client withdrawals, Michael Kim, an analyst with Sandler O’Neill & Partners LP in New York, said in an interview before earnings were announced.

The $1.37 billion takeover, which included the Van Kampen unit, added $114.6 billion to the amount of money Invesco manages for clients. Assets rose 46 percent from a year earlier to $616.5 billion. An 11 percent increase in the average value of the Standard & Poor’s 500 Index in the fourth quarter compared with a year earlier also helped boost assets.

Invesco aims to cut expenses by $78 million over two years by combining some of its funds with others acquired in the Morgan Stanley deal, the company said in November. It has proposed folding 69 funds into 43 others. The company said it expects to receive shareholder approval for the mergers within seven months.

Earnings Contribution

Invesco’s deal with Morgan Stanley will add about 21 cents a share to earnings in the first 12 months after closing and 23 cents in the second year, Invesco said in June. The deal was Invesco’s largest since its $1.54 billion purchase of Britain’s Perpetual Plc in 2001.

BlackRock Inc., the world’s largest money manager, said Jan. 25 that fourth-quarter net income more than doubled to $657, driven by its 2009 acquisition of Barclays Global Investors.

Invesco announced results before the start of regular U.S. trading. The stock has risen 17 percent in the past year, the same as the Standard & Poor’s 15-company index for asset managers and custody banks.

(Invesco will hold a conference call at 9 a.m. New York time. The call-in number is 866-603-2143 in the U.S. and Canada, 0800-279-3953 in the U.K. and +1-210-795-1098 elsewhere.)

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net.

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