Robert Fleming & Co.
Robert Fleming & Co. was an asset manager and merchant bank founded in Dundee, Scotland, in 1873. In 1909 the firm moved its headquarters to London. It was sold to Chase Manhattan Bank for over $7 billion in 2000.
Flemings was a 50% partner in the highly successful Asian investment bank Jardine Fleming. At its height in 1997, Robert Fleming Holdings reported over 8,000 employees and operations in 44 countries.
The firm of Robert Fleming & Co., known as Flemings, was founded in Dundee, Scotland in 1873 by Robert Fleming, a successful manufacturer of jute fabrics used for sandbags in the American Civil War. The firm was originally formed as a series of investment trusts, pooling money from Scottish investors into overseas ventures, and later moved into merchant banking. In 1909 the firm moved its headquarters to London.
In 1873, Robert Fleming cofounded the Scottish American Investment Company for the purpose of investing in high risk, high return American railroad bonds. The Scottish Widows was a significant early investor. In 1876, Flemings represented the bondholders' committee of the Erie Railway, then under the control of Jay Gould, and saw its plan for the financial reorganisation of the railroad largely adopted. Due to the successful Erie experience, and in its role as a significant railroad investor, Flemings was involved in the successful restructuring of numerous other North American railroads in the 1870s, 1880s and 1890s. Each restructuring produced significant gains for the Fleming investment trusts and drew more investors. Flemings assumed a central role in the 1886 battle with Jay Gould for control of the Texas & Pacific Railway, in which the Flemings bondholder group ultimately triumphed. Overall, Flemings claimed to have made a 40% return on investments in US railroads.
By 1900, opportunities in railroads had subsided and Flemings largely left North America. In the 1990s, it entered into a US asset management venture with T. Rowe Price, a large US mutual fund company.
Expansion in Asia and Africa
In the twentieth century, Flemings focusing its overseas energies on Asia and Africa. In 1971, Flemings opened a Tokyo office and in 1988 opened an office in Bangkok. After 1970, most of its Asian activities were conducted through Jardine Fleming (see next section). In addition, Flemings was a major player in Africa, particularly in the mining industry. As apartheid drew to a close, Flemings opened offices in southern Africa (Fleming Martin in South Africa, Edwards & Co. in Zimbabwe, and Stockbrokers Botswana in that country). It advised Glencore in its move from Johannesburg to London, where it was listed in 1997, as well as a similar move by Billiton (later BHP Billiton), which became a constituent of the FTSE 100 in 1997.
Relationship with Jardine Matheson
In 1970, Flemings entered into an investment banking joint venture with Hong Kong based Jardine Matheson, forming Jardine Fleming. The tie-up was prompted by the long-standing family links between the Flemings and the Keswick family of Scotland, who have run Jardine Matheson since its founding.
Flemings at the end of its days
In 1997, Robert Fleming Holdings had operations in 44 countries in Asia, Eastern Europe, the Americas and Africa. Its net assets as for the 1997 fiscal year were £841 million and its profit before tax for the year was £136.1 million. Its global asset management business managed £63 billion on behalf of institutional and private investors around the world. These results included Jardine Fleming, which in its own right had operations in fifteen countries in the Asia-Pacific region, seats on twenty stock exchanges and some US$19.7 billion in funds under management. Jardine Fleming’s profit before tax for the year was US$41.4 million. The firm’s significant transactions included the privatization of state-owned Pakistan Telecommunication Co. Ltd. in 1994.
Through its history, the firm wore its Scottishness on its sleeve. In addition to being controlled by the Scottish Fleming family, there were other signs of its Scots heritage. A bagpipe player regularly greeted visitors at its London headquarters until 2000. In the 1990s, its main non-Fleming family backers were Scottish institutions such as Baillie Gifford and Stewart Ivory. The firm also owned the most extensive private collection of Scottish art in existence, removed to an art foundation, The Fleming-Wyfold Art Foundation, created to protect the art works and prevent any buyers of the failing bank from selling off the collection.
Scandal, crisis and restructuring
The Fleming name was tarnished by a scandal in 1996, when Jardine Fleming was ordered to pay $19 million to fund investors for alleged abusive and unsupervised securities allocation practices by asset management head Colin Armstrong. The 1997 Asian crisis severely hit both Robert Fleming and Jardine Fleming. Robert Fleming was forced to approve massive lay offs in late 1998. The firm restructured in 1999, buying the remaining fifty percent stake in Jardine Flemings in return for giving Jardine Matheson an eighteen percent stake in Robert Flemings Holdings. However, despite these efforts, Flemings continued to see its investment banking and asset management market share decline as global investment banks like Morgan Stanley and Lazard moved into their markets.
Sale to Chase
In April, 2000, Robert Flemings Holdings was sold to Chase Manhattan Bank for $7.7 billion. Although the sale came about as partially as a result of Flemings’ weakened position, it was part of two larger trends: consolidation in the financial services industry as large US commercial banks acquired investment banks upon the repeal of the Glass–Steagall Act, and the sale of UK merchant banks to foreign banks. Flemings, with almost no US assets, was considered a particularly good fit for increasingly globally minded Chase, whose assets lay largely in the United States. In the sale about 130 Fleming family members pocketed approximately $2.3 billion for their thirty percent stake. When Chase merged with J.P. Morgan & Co. in 2001, the Flemings asset management business was rebranded J.P. Morgan Fleming, and Fleming Premier Banking was sold to Abbey National's Cater Allen subsidiary.
The members of the Fleming family have since set up an asset management company, Fleming Family & Partners, chaired by former Morgan Grenfell head John Craven. In 2005, they sold twenty percent of the business to Standard Chartered Bank, a venerable Hong Kong institution like Jardine Matheson, for £45 million. The bank business of Jardine Fleming was bought by Standard Bank, a large South African bank, in 2001.
- Quoting Fleming Family Partners partner Mark Graber in Gateway to Russia, March 18, 2002
- http://www.irasia.com/listco/sg/jm/press/p981203.htm%7C Fleming Holdings press release, Dec. 3, 1998.
- Garfield, Andrew (4 Dec 1998). "Fleming cements ties with Keswicks". The Independent. Retrieved 27 May 2010.
- Griffiths, Katherine (15 May 2001). "Abbey buys Fleming Premier for £106m". The Independent. Retrieved 27 May 2010.
- Treanor, Jill (15 May 2001). "Abbey National pays £106m for 'premier' bank". The Guardian. Retrieved 27 May 2010.