“IF they take me out of here it will be in a box,” said Walter Scott yesterday, vowing to stay with the investment business he had just sold for an estimated several hundred million pounds.
The sale of his 70 per cent stake to Pittsburgh-based Mellon Financial makes the nuclear physicist-turned-fund manager one of Scotland’s wealthiest men. It will give the 59-year-old more money to explore his hobbies of renovating further chunks of Edinburgh’s Charlotte Square, flying his three private planes, and driving Ferraris.
But it also looks likely that Scott, already a keen philanthropist, will be wanting to put something back into society with the establishment of a charitable foundation along similar lines to the Stewart Ivory Foundation.
In spite of the money from the sale, Scott denies he had any real interest in selling the institutional fund management business that he co-founded with two former colleagues from Ivory & Sime, Marilyn Harrison and Ian Clark, in 1983.
Scott, who knew Mellon because his clients used the US group for back-office work, told The Herald: “At no stage did we think in terms of selling. We just felt comfortable with Mellon and thought we could work in the future with them. We think they will be able to provide broad shoulders for us as we go forward, particularly where compliance and regulation are concerned.
“Also it deals with the fact that, at 59 years old, I am the majority shareholder. That is not a particularly pressing issue today, but it could become a pressing issue.
“And younger men are enthused by the fact Mellon, founded by a Scotsman 135 years ago, is a very well respected, very large global player, which should create opportunities that might not otherwise have arisen.”
Scott is delighted that Mellon believes in owning a range of “boutique” fund management groups around the world, and allowing these to run themselves fairly autonomously. He said he, Walter Scott & Partners chief executive Alan McFarlane, and his two co-founders would remain with the firm — and that kilts would continue to be worn by himself and his colleagues when they pitch the firm’s services to US-based pension fund clients.
Asked about the sale price, Scott said: “I could not possibly comment.” However, he did reveal that the ultimate price paid by Mellon will be based on a five-year earn-out contract, with various portions of the total sum paid in dribs and drabs between now and May 2011.
“If we do a really good job, as I hope we will, and the markets don’t fall to bits — which looks rather optimistic given what’s happened today — then we’ll end up getting more at the end of the process than at the beginning.”
Asked if he would consider leaving the business or moving out of the firm’s current offices at 1-4 Charlotte Square, Scott said: “If they take me out of here it will be in a box.”
Scott concedes that the sale of the business —which was only known about by him and a couple of his closest aides — came as a total surprise to its 56 staff yesterday morning.
“We only told people today. The secret had been so well kept that the initial reaction was one of jaws dropping. But then there was a surprisingly positive response.
“Ideally, I’d like them to see it as a 23-year-old Scottish-based investment firm doing a reverse takeover of a 135-year-old Scottish firm based in Boston.”
This article was published in The Herald on 18 May 2006. See also the Financial Times article I wrote on the sale of Walter Scott & Partners to Mellon Financial.