Magazine article American Banker

Rowe Price May Reorganize, Sell Stock: Investment Firm Desires Capital Source in Face of Rising Costs, Competition

Magazine article American Banker

Rowe Price May Reorganize, Sell Stock: Investment Firm Desires Capital Source in Face of Rising Costs, Competition

Article excerpt

BALTIMORE--T. Rowe Price Associates, the Baltimore investment counseling and mutual fund manager, said it is considering a reorganization of the company and the possibility of offering "a modest amount" of stock to the public in 1986.

The company, which manages about $18.5 billion in 14 mutual funds and numerous institutional accounts, is now owned by about 175 present and former employees.

George J. Collins, president and chief executive officer, said the firm would continue as an independent company and that its present management would stay in place and keep its significant ownership position despite any changes in its capital structure.

Although the company is in its trongest financial condition since its founding in 1937, he said, Price Associates faces increasing competition and rising costs of expanding financial services. These factors "make it desirable for the firm to have a permanent capital base as well as means of raising capital in the future."

George A. Roche, a director of the firm and its chief financial officer, said expenses such as repurchasing the stock of shareholders who have left or retired from the firm restrict the growth of permanent capital.

In addition, the firm, which used to have very few fixed capital costs, now finds itself making large capital investments. One example is the specially designed phone system recently installed at a cost of about $2 million. It lets the firm's own staff answer questions from investors in the mutual funds it manages, rather than having them answered by a Boston bank that is the firm's transfer agent. …

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