Nov. 4–Financial services giant Citigroup announced Monday that it is acquiring Portland-based Forum Financial Group, a move that officials say eventually could double or even triple the size of theMaine work force.
Forum, a low-profile provider of back-office services for mutual funds and other investments, has roughly 200 employees in Portland. Another 200 are located in Warsaw, Poland, and Bermuda. The deal means those 400 workers will become Citigroup employees and that Portland will become Citigroup’s global headquarters for the planned expansion of its Global Transaction Services division.
The deal is expected to close by year’s end. Both companies declined to disclose the terms of the transaction.
Forum is owned entirely by John Keffer, the company’s chief executive officer.
Mergers with multinational corporations sometimes can be a mixed bag for employees, especially when companies see consolidation as a way to trim costs. Citigroup, the nation’s largest bank in terms of assets, cut thousands of jobs in 2001, as the economy stalled. But both companies stressed Monday that this merger was different.
“This is an acquisition based on growth, not on cost cutting,” said Keffer, who founded Forum in 1986. He will stay on to head Citigroup’s Global Funds Administrations Services business.
The merger was praised by Gov. John Baldacci, who attended the Portland news conference.
The acquisition represents another Maine firm being sold to a large, out-of-state company, but Baldacci said the fact that Citigroup was keeping the division headquarters in Portland gave him some comfort that jobs would be added here.
“This is a banner day for the state of Maine,” he said.
Matthew Kelley, a stock analyst for the Boston-based investment firm Moors and Cabot, agreed that the announcement is good news for the city and the state.
He said that Citigroup’s decision to set up its division headquarters here, coupled with last year’s arrival of some back-office operations for J&W Seligman, a mutual fund provider with close to 100 employees in South Portland, is helping to create a small niche for the area in the world of financial services.
“It’s a real nice addition to the Portland financial services market,” said Kelley, who used to work in Portland with the investment firm Tucker Anthony. “I would definitely view this positively for the Portland market.
“This may attract some additional players to move into the market.”
As more workers gain experience in some of the services provided by Seligman and Forum, he said, it makes the market a low-cost alternative to setting up or expanding operations in New York.
Kelley said the acquisition also seems to make sense for both Citigroup and Forum Financial.
Citigroup gets a company in a new line of business, at a time when the market for mutual fund administration is likely to start growing again. That segment took a beating in the last few years as the stock market declined, but firms are likely to start new funds or expand existing ones as the market begins what’s expected to be rebound.
“Now is an intriguing time to purchase a business like that as the equity markets are just starting a recovery,” Kelley said.
For Forum, the purchase by Citigroup should make it easier to land new clients.
“They’re a small player, clearly competing against some bigger companies,” Kelley said of Forum. “Using the Citigroup name will clearly open up doors and opportunities that I do not believe would have been available.”
Forum is a leading service provider to the global mutual fund, hedge fund and offshore fund industries. These services aren’t widely recognized by many people. Basically, Forum does the behind-the-scenes work that lets these investments operate, such as processing checks, sending statements, tracking transactions and maintaining filings for regulators. Many of the workers have training as accountants and financial services managers.
Salaries range from $25,000 to $100,000.
Keffer, who had worked in the early 1980s for Citibank, started Forum in New York. But he later bought a farm in Maine and decided to move the operation to Portland. Fueled by the growth of the mutual funds industry, Forum expanded from 15 employees in 1989 to 167 in 1997.
Last summer, Citigroup approached Forum to market a part of its funds business, Keffer said. But as both companies talked, it became clear that Forum had the expertise Citigroup wanted in order to expand in North America, and Citigroup had the financial resources to let Forum grow.
“We filled a product gap that Citigroup had,” Keffer said.
Brian Steel, a spokesman for Citigroup, said that acquiring Forum represented a growth opportunity for the global corporation, which will operate the funds administration business in 24 countries to start. Neither Steel or Keffer could say when the division would hire more workers. The pace of growth would depend on which clients are developed, and when.
By Edward D. Murphy and Tux Turkel
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(c) 2003, Portland Press Herald, Maine. Distributed by Knight Ridder/Tribune Business News.
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