South African financial services company Sanlam Group is consolidating its Australia-based boutique fund management firms, Atom Funds Management and Eight Investment Partners, into one business.
Eight Investment Partners chief executive Rick Steele said the measure was taken to create a platform for further growth in Australia.
"Our aim is to expand our Australian footprint; we want to expand our Australian presence," Steele said.
"And if we want to expand in Australia, we might as well do it for the broader business."
Atom Funds Management runs a small companies fund, while Eight Investment Partners has an exposure to Australian equities in its Asia Pacific Partners Fund.
"[The consolidation] allows us to economically take advantage over our capabilities," Steele said.
"We are located in Australia and it is a big market and we want to increase our capabilities here."
He said it was likely the company would seek to launch new funds.
"Probably; we haven't committed to that, but we are looking to increase our involvement in Australia," he said.
The Atom Small Cap Fund has performed well so far this year.
The fund has returned almost 40 per cent, while over a three-year period to the end of February 2011 it returned 4.5 per cent.
However, Atom Funds Management has struggled to grow its funds under management since it teamed up with Sanlam in August 2008.
"We previously rated the fund as three stars and held some concerns about the sustainability of the business, as it had not managed to grow assets under management," Standard & Poor's Fund Services (S&P) analyst Justine Gorman said yesterday.
According to Morningstar data, the Atom Small Cap Fund has about $15 million in assets under management.
As a result of the consolidation, Atom Funds Management chief investment officer David Shearwood will be leaving the company.
"The CIO for Eight Investment Partners is Kerry Series and he will have an overarching investment role across the two teams," Steele said.
Atom managing director Drew Wilson will also exit the firm, but will assist the businesses in transitioning to a single management structure.
George Raftopulos will be the lead portfolio manager for the Atom Small Cap Fund.
S&P placed the fund on hold after the changes were announced.
"Until [Eight Investment Partners] has implemented the necessary changes to the business, we believe it prudent to place the Atom Small Cap Fund on hold," Gorman said.
