WILLIE Watt, chief executive

of Martin Currie, yesterday expressed his confidence that

the Edinburgh investment house could ultimately achieve the

current scale of neighbour and rival Baillie Gifford - while remaining employee-owned.

This would entail a near-

quadrupling of funds from (pounds) 6.1bn just now, with privately-owned partnership Baillie

Gifford running about (pounds) 20.8bn.

But Watt was at pains not to specify exact targets for fund growth - let alone put any timescale on their achievement.

The Aberdonian, who has made a raft of senior appointments and tempted top talent from London to Edinburgh since arriving at Martin Currie in January last year, said: ''I think the best thing is to build the machine and then to drive that machine hard.''

He highlighted the potential for Martin Currie to win big investment mandates from UK pension funds soon, to secure significantly more institutional business from the US in the medium-term, and ultimately to gain critical mass in mainland Europe.

Spelling out ambitions to offer more specialist investment products and services yielding higher management fees, Watt signalled little appetite for acquisitions. He said Martin Currie would prefer to take on teams from rivals where these fund managers had niche expertise.

He said: ''We really believe we can grow it (Martin Currie) well. Baillie Gifford provide an excellent example of successful growth. We don't see there are any barriers to growth by being a private company.''

Watt, although he is likely to have persuaded many companies down the flotation route during his long career with venture capitalist 3i, said: ''I think private ownership is the best structure for an investment management company. It allows the management to ride out the economic cycle, and it allows you to attract and incentivise the best people.''

Asked if Martin Currie could ultimately reach the scale of Baillie Gifford, he replied: ''We would like to.''

Pressed on whether this could be achieved, he said: ''I think it is achievable.''

Joking that Baillie Gifford would be on the telephone to buy him a gin-and-tonic for his kind words, Watt said of his rival: ''They have just done a professional job over a long period.''

He emphasised it was important for the wider Scottish financial community not to try to claim all rival fund managers were bad.

Watt said: ''We should recognise that others have done a good job. Most of us operate on an international basis. It is a huge market. We don't wish anyone who operates in the Scottish market-place ill at all. We hope they will prosper because that would be good for the cluster.''

He demonstrated Martin

Currie's increasing specialisation by citing its soundly-performing (pounds) 30m UK Active fund - which in contrast to balanced or index-tracking funds features relatively few stocks and is managed actively.

He also cited a e32m mandate from a Swedish client to provide conventional management of equities in Europe and North America and a ''long-short'' arrangement in Japan, whereby there is exposure to individual Japanese companies rather than to overall Tokyo stock market or currency movements.

Martin Currie, which employs 235 people and is 90%-owned by 70% of its employees and 10%-owned by former directors, also runs $150m in hedge funds, and Watt claimed it was at the forefront of developing this area in Scotland.

Watt, a former pupil of comprehensive Aberdeen Grammar who has had no trouble fitting into a blue-blooded Martin

Currie, said: ''We want to stick with quite a small range of funds which we can strive to be excellent in, rather than cover everything under the sun. What we want to do is become focused on higher added-value investment management, because we think that is what a small (investment) house like ours should be good at.

''Why would you want to buy more general products from a small house? We have to be more specialist and more focused, and hopefully that will mean higher fees.''

He pointed to the investment house having dropped things like money market and smaller companies funds because ''these are things we can't be excellent at''.

Watt highlighted a three-step process of getting the right

people in, ensuring the investment performance was right, and mounting an aggressive sales campaign. He said Martin Currie had good performance from UK, Japanese, emerging markets, and Asian assets. It was looking to improve the performance of mainland European and general international equity funds.

Watt pointed to current interest from UK pension funds, and potential to sell ''UK Active'', regional, and global or global-ex-UK equity investment to them.

He expects continuing demand from US institutions for international, and particularly emerging market, equity management. North America accounts for 40% of Martin Currie's funds. Watt cited Scandinavia, Holland, and Switzerland as possible areas for expansion. About 10% of Martin Currie's funds are from mainland European clients at the moment, but he expects the investment house to take some time to gain critical mass in these markets.

Martin Currie does not plan to sell directly to rich individuals in Europe, preferring to seek business from institutions and target retail investors through private banks.

Watt remains keen to expand Martin Currie's (pounds) 150m of venture capital funds, but has still to appoint someone to head this drive. He wants to do this by investing in private equity funds managed by venture capitalists, rather than putting the money directly into companies.