From the Boston Business Journal
Fidelity Investments CEO and chairman Abigail Johnson played down the possibility the company would ever go public in an interview produced by Bloomberg News, though she pointed out such a move would help the company make more acquisitions.
Fidelity has been approached by investment bankers about an initial public offering, though not as much as when her father was in charge of the company, Johnson told The Carlyle Group co-founder David Rubenstein in an interview for a video series that Rubenstein hosts for Bloomberg. Johnson became CEO in 2014 and chair last year.
“By the time I came along, all of the investment bankers had given up on making that pitch because they made it to my father so many times and it never went anywhere,” she said.
Fidelity is one of the largest asset managers in the U.S. While it’s privately held, some of its primary competitors, including BlackRock (NYSE: BLK) and Boston’s State Street Corp. (NYSE: STT), are publicly traded.
For the Johnsons, going public is a matter of need. “I would say the first thing my father always said is we don’t need the capital that going public would bring us, so if we don’t need the money, why would we go ask for it,” she said.
She favors the flexibility that goes along with a privately held firm. “We don’t have to go through the practice of reporting publicly our quarterly earnings and explaining the earnings to a broad audience,” Johnson said. “Now, we do watch our earnings very carefully because it is all of our money that is the capital base of the company, so don’t be confused. Returns matter. They matter a lot. The consistency of the returns probably matters less because everybody’s in for the long term.”
Johnson acknowledged that the current ownership structure affects Fidelity’s M&A activity. “We don’t have the benefit of a public currency to be acquisitive,” she said, “which is one reason why we generally haven’t done acquisitions of other companies.”
Johnson, who rarely makes public appearances, hit on several other topics in the 24-minute interview with Rubenstein, including whether she hopes her daughters rise in Fidelity’s ranks (it’s up to them, she says) and whether she gets recognized much in public (generally only by employees, according to Johnson).
