Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. Print
May 17, 1999 01:00 AM

BUYING MANAGERS: INSURANCE COMPANIES, BANKS ARE THE HUNTERS

Linda Sakelaris
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Insurance companies and banks are on the prowl.

    The two have shown they are very interested in buying investment management firms this year, said Don Putnam, managing director of Putnam, Lovell, de Guardiola & Thornton Inc., New York.

    Six investment management deals were made in the first three months of the year, five of which were valued at less than $250 million, according to Putnam Lovell's preliminary data. Total deals are valued at more than $1 billion. Most of the buyers were other investment management companies.

    However, insurers have been very active shoppers as well. For instance, officials at Nationwide Financial Services Inc. in Columbus, Ohio, said they would like to buy both a value equity and a growth equity money management shop.

    American International Group Inc. just snapped up small-cap and midcap equity manager John McStay Investment Counsel in Dallas. McStay has about $4 billion in total assets. New York-based AIG paid an estimated $100 million.

    A win-win deal

    While that deal was a decent size transaction for McStay -- 2.5% of assets under management -- it was a relatively small deal for AIG, which laid down $18 billion Jan. 1 to purchase SunAmerica Inc., a Los Angeles insurer with a $3 billion mutual fund business.

    Analysts portray the McStay purchase as a coup for both parties. McStay, which has about $800 million in mutual fund assets, needed a long-term mutual fund distribution channel and might have gained an international entree as well; AIG sought an institutional manager with strong performance to manage mutual fund, institutional and possibly insurance assets.

    Another recent insurance buyer was Zurich-based Credit Suisse Group, which paid $650 million for Warburg Pincus Asset Management in February. New York-based Warburg has $23.5 billion in total assets under management.

    The size of the selling firm will continue to have less impact on the price tag than the firm's investment performance and product capability, Mr. Putnam said.

    Most of the sellers are smaller managers that recognize the need to team up with larger firms that are more adequately positioned, he said.

    For example, fixed-income manager Fred Tattersall sold his firm to First Capital Group in February because he was concerned about future expansion.

    Mr. Tattersall said he didn't enter the high-yield debt business several years ago when it began to be part of the new opportunistic style of fixed-income investing. Consequently, the firm found itself left out of many of today's pension fund bond searches.

    First Capital, a division of Charlotte, N.C.-based First Union Corp., paid an estimated $70 million to $100 million for Tattersall Advisory Group, Richmond, Va.

    Robert Watson said he sold his Norwalk, Conn., firm The Managers Funds in February when he determined he wasn't sure how to take it "to the next level." The Managers Funds has $1.7 billion in total assets under management. It is estimated Boston-based Affiliated Managers Group paid between $50 million and $80 million for the manager of managers.

    AMG's purchase of The Managers Funds is one of the few holding company transactions so far this year. Liberty Financial Cos. Inc., Boston, backed out of its agreement to buy Societe Generale Asset Management in March after the SocGen funds suffered from enormous withdrawals prior to the close of the sale. Officials at United Asset Management Corp., Boston, said the firm intends to grow internally this year; Franklin Resources Inc., San Mateo, Calif., is battling emerging market losses and fund withdrawals; and Nvest LP of Boston has suffered withdrawals that led to disappointing earnings in the first quarter.

    Not all strategic transactions have involved a complete sale of a firm. Nicholas-Applegate Capital Management LP, San Diego, sold only its retail mutual fund business to Pilgrim America Capital Corp. in February. Pilgrim paid $22.5 million for the business, which had $1.4 billion in total assets.

    Critical mass needed

    Art Nicholas said the fund business wasn't profitable without critical mass, which was possible only at the high cost of prolific marketing.

    Nicholas-Applegate just last month sold its Houston-based fixed-income division, the former Criterion Investment Management, to a German bank for an estimated $100 million to $150 million. The unit has $9 billion in domestic fixed-income assets, primarily for institutional investors. (Pensions & Investments, May 3).

    Not all money managers want to sell their firms to move ahead, according to a recent study by PricewaterhouseCoopers LLP, Boston. Interviews with 170 investment management executives worldwide revealed most small and mid-size firms plan to grow through internal expansion, joint ventures or alliances rather than by making acquisitions or selling themselves to larger players.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    OCIO, Anchor in Rough Seas
    Sponsored Content: OCIO, Anchor in Rough Seas

    Reader Poll

    May 9, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Are Factors a Thing of the Past?
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    Out of the Shadows: The Revolution in Shadow Accounting
    The pivotal role of fixed income markets in the ESG revolution
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 9, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference