Directors, workers buy Brown unit Brown Capital sold by Bankers Trust for an undisclosed price

It manages $2.9 billion

5-year-old company must find new name by end of the year

Investing

July 01, 1998|By Bill Atkinson | Bill Atkinson,SUN STAFF

Directors and employees of Alex. Brown Capital Advisory & Trust Co. led a buyout of the company yesterday from parent Bankers Trust New York Corp. for an undisclosed price.

Michael D. Hankin, president and chief executive of Brown Capital, said nine directors and 70 employees raised the money to buy the Baltimore-based company, which manages $2.9 billion in assets for institutions and wealthy families.

"It is a good story," Hankin said. "It is kept local, and the employees end up owning a meaningful part" of the company.

The company has about 300 clients, about 55 percent of them in the mid-Atlantic region, Hankin said.

Its services include investing money for its clients in stocks and bonds, setting up charitable trusts and administering trust funds. Accounts managed by the company generally must be greater than $10 million.

A Bankers Trust spokesman confirmed that the transaction had been completed yesterday but declined to provide further details.

The buyout comes nearly 15 months after Bankers Trust, the nation's seventh-largest banking company, bought Baltimore-based Alex. Brown Inc., the country's oldest investment house, for $1.7 billion. After the deal, Alex. Brown's name was changed to BT Alex. Brown Inc.

Hankin said that shortly after the merger, executives of Alex. Brown and Bankers Trust discussed what they should do with Brown Capital, which was started in 1993 as a subsidiary of Alex. Brown. "That led naturally to discussions of whether it should be autonomous, but within Bankers Trust, or completely independent," Hankin said. "There was a mutual agreement that clients would best be preserved if it were set up independently."

The company poses little threat to Bankers Trust, which manages $335 billion in assets and has $2 trillion in global assets in custodial accounts.

Hankin said David L. Hopkins, chairman of Brown Capital, becomes chairman of the company under the new ownership, and Truman Semans and Charles W. Cole Jr., who also have been top executives of the company, become vice chairmen.

Hankin said the company will keep its name until the end of the year, when it must find a new name as part of the agreement.

He said BT Alex. Brown will continue to process client records for the company and that Brown Capital will continue managing two mutual funds for Flag Investors, BT Alex. Brown's mutual fund family.

Pub Date: 7/01/98

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