Thai clients will benefit from Schroders' sell-off

THE sell-off of Schroders' investment banking business to Salomon Smith Barney, a subsidiary of Citigroup Inc, will allow the UK-based investment and asset-management firm to strengthen and focus its business solely on fund management, said Suvabha Charoenying, chief executive officer of Nakornthon Schroder Asset Management Ltd.

Reacting to Salomon Smith Barney's purchase of Schroders' investment banking business for US$2.2 billion, Suvabha said: ''The deal is quite good for us, for it will allow Schroders to focus on developing its fund management business.

''It will also allow us to improve and expand the range of services we provide and, therefore, be of significant benefit to our clients in Thailand.''

The acquisition of Schroders' investment-banking business will double Citigroup's investment banking and equities platforms in Europe. It will also combine Salomon Smith Barney's strength as a global financial firm with a rapidly growing European operation, with Schroders' strength as an adviser to major European corporations, Salomon Smith Barney said in a statement.

It added that the resulting company in Europe will be a leading competitor in all aspects of the business -- equities, fixed income, and mergers and acquisitions.

Suvabha said she was not surprised by the deal because it was no secret that several parties had been going after Schroders' investment-banking business. ''We learnt about the deal very early in the morning but it was not until 11 am that we were able to put out a news release.''

Nakornthon Schroder Asset Management presently has Bt6.5 billion in assets under its management. As a group, Schroders worldwide manages US$200 billion in assets, putting it in the top tier of independent fund-management companies.

According to Salomon Smith Barney, Schroders' shareholders will receive consideration expected to approximate US$1.46 billion in cash, Citigroup shares and loan notes for the UK operations of Schroders, with the balance of the purchase price being paid to the company in cash for the investment banking operations outside of the UK.

The book value of the assets to be acquired on a GAAP basis is about US$1.3 billion, indicating a purchase price transaction of 1.7 times the book value.

BY Thanong Khanthong