BT Investment Management a $40 billion manager

Westpac intends to have its investment management spin-off, BT Investment Management, listed on the Australian Securities Exchange towards the end of the year or early in 2008.

Westpac will hold a majority stake, although it has yet to determine the precise amount. Investment management staff will have their existing long term incentives converted to stock in the new company. Key staff will be awarded additional shares.

Westpac hopes to have a "reasonably free float" in the company and will offer shares to institutional investors and Westpac retail shareholders.

BT Investment Management will be Australia's seventh largest investment manager, with $40 billion of funds. In contributes 10 per cent of BT Financial group's earnings and less than one per cent of Westpac's overall earnings.

The company's chief executive will be Dirk Morris, who has been head of the business since joining last October. Morris came to BT from the big US fund manager Putnam, where he was the chief investment officer for currency.

BT Investment Management will have what is being described as a multi-boutique structure. Staff will be put into one of four teams: equity strategies, macro strategies, income strategies and multi-strategy. Remuneration will be based on performance within each "boutique".

BT Financial Group chief executive, Rob Coombe, said BT Investment Management had a strong performance history over the past five years, putting its horror days of the late 1990s behind it.

Its flagship funds have high ratings and a number are top quartile performers over short- and long-term performance periods.

Coombe said: "Institutional fund managers can't get the perfect alignment of staff, customers and shareholders. We can do this. We think our model will attract talent."

Coombe said Westpac had experimented with synthetic equity before deciding to float the investment management business but found that the scheme was not effective for retention.