BUYS SOGEN BIZ FOR $216 MILLION: LIBERTY PICKS UP OVERSEAS CLOUT WITH FRENCH LINE

Liberty Financial Cos.’s acquisition of the U.S. mutual funds unit of Societe Generale SA adds much-needed muscle to Liberty’s international money-management business.

With the $216 million purchase of New York-based Societe Generale Asset Management Corp., about 11% of Liberty’s assets will be in international funds, up from 2.7% before the deal. The Boston money manager is also gaining the investing savvy of Jean-Marie Eveillard, one of the world’s most respected international money managers.

“He’s absolutely the best,” says James Grant, editor of Grant’s Interest Rate Observer. “He is patient, knowledgeable and true to his craft — which is seeking out value in the market.”

Liberty is buying Societe Generale’s U.S. fund unit for about $207 million in cash, plus about $9 million in newly issued company stock, says Kenneth R. Leibler, Liberty’s president and chief executive. The deal is expected to close this fall.

team plans to stay

The four SoGen mutual funds are managed by a team that includes Mr. Eveillard and two associate portfolio managers, Charles DeVaulx and Elizabeth Tobin. All have signed agreements to remain at least until 2003.

The five-year contract offers some reassurance to investors. “As long as Jean-Marie Eveillard remains on board there’s no reason to bail,” says Lou Stanasolovich, president of Legend Financial Advisers Inc., which is based in Pittsburgh and has $2 million of its $60 million under management invested in SoGen funds.

For his part, Mr. Eveillard is looking forward to operating somewhat independent of Liberty. “We like the fact that we are not going to be fully integrated into a particular money management firm,” he says.

The deal comes at a time when the U.S. mutual fund market is maturing and many local fund companies are looking abroad for much of their growth. Among those aggressively launching international funds are Franklin Templeton Group, American Funds and Merrill Lynch Funds Distributor.

Liberty oversees $1.5 billion in international funds, including four Asian stock funds run by another Liberty unit, Newport Pacific Management in San Francisco. The addition of the SoGen funds, including the $3.5 billion SoGen International Fund, will bring to Liberty another $5 billion in international fund assets.

“It’s a smart move,” says Ray Liberatore, an analyst at Financial Research Corp. in Boston. “Liberty needs to build up its international assets outside Asia and the Pacific Rim.”

It also comes at a time when SoGen’s investment performance has been anything but impressive. The SoGen International Fund lost 2.11% for the year ended Aug. 12, significantly trailing its peer group average of 1.55%, according to Morningstar Inc., the Chicago fund tracker.

The loss is partly because Mr. Eveillard, who manages the fund, invested heavily in Japanese stocks and gold, both of which have been laggards. It’s also because his value style of investing tends to avoid the large blue-chip stocks that have been popular in recent years.

“I am not running a small-cap fund,” says Mr. Eveillard. “But anyone who looks at the portfolio knows that it has a lot of small- to medium-sized securities in it.”

This acquisition of SoGen is the third deal announced by Liberty since June. The unit of Boston’s Liberty Mutual Life Insurance Co. recently agreed to buy Progress Investment Management Co., of San Francisco, and Crabbe Huson Group Inc. of Portland, Ore. In all, Liberty oversees $54 billion is assets through six subsidiaries, including Colonial Group Inc., of Boston and Stein Roe & Farnham Inc. in Chicago.

While he refuses to rule out the possibility of another acquisition in the near future, Mr. Leibler says he intends to concentrate on digesting his latest purchases. “I think we’ve covered most of the businesses and investment styles that we are interested in,” he says. “It does take time to close and absorb three transactions.”