Back in 2005, the chances that Amvescap, now Invesco, would make a 360-degree turnaround seemed virtually impossible, but with a little bit of time and the addition of Martin Flanagan as chief executive officer, the unlikely actually occurred.
After the former protege of renowned investor Sir John Templeton took the reins of Amvescap, loyal investors have witnessed the company's stock price more than double, to trade at roughly 15.7 times ahead of forward earnings, Institutional Investor reports.
So, how exactly did Flanagan manage to overcome a trend of poor performance, recover from the scarlet letter from the 2003 mutual fund trading scandal, and ultimately reposition Invesco for a better future?
"The old Amvescap was a holding company of asset managers," Flanagan said. So, he slashed management, restructured the firm and relocated the global headquarters from London to the firm's original home in Atlanta. He even rebranded the company by changing name back to Invesco last May.
Flanagan also had the difficult task of letting people go, and fired many employees himself. He then decided to make former CEOs of every Amvescap company a division head reporting directly to him.
Cross-selling and international growth became two of Flanagan's biggest priorities. Eventually, the size of the company's non-U.S. client base doubled, which currently represents almost 40% of Invesco's assets under management. Additionally, Flanagan expanded the firm's product line by making several acquisitions, including private equity and exchange-traded funds.
"When I first got here, every trend line you could think of was positioning in the wrong way, but in the past two years, you can see very strong operating results coming through," Flanagan said.
Since the end of 2004, assets under management have increased 26% from $382 billion to $480 billion as of the end of March, and Flanagan managed to turn an after-tax loss of $2.29 billion in 2005 into a net profit of $673.6 million in 2007.
"It is still [in the] early days, but the reality is that this is a company that went through some painful times, and his team came in, righted the ship and put the company on a course to realize its potential," said D.J. Neiman, an analyst at William Blair & Co.
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