NEWPORT BEACH, Calif. -- Move over, Gary Brinson. Make room for Bill Gross.
The possible acquisition of Mr. Gross' firm, Pacific Investment Management Co., by Allianz AG Holding has investment management pundits working overtime on scenarios in which Mr. Gross gains a huge global reach, not to mention tens of millions of dollars.
That's strikingly similar to what happened to Mr. Brinson. First, he sold his company, Brinson Partners Inc., to Swiss Bank Corp., and split a reported $460 million with his partners in the $750 million deal. Then, SBC merged with Union Bank of Switzerland. In the process, Mr. Brinson became chief investment officer overseeing $340 billion in institutional and mutual fund assets worldwide.
Mr. Gross is better known than Mr. Brinson was when his urge to merge first struck. Indeed, Mr. Gross, as chief investment officer of PIMCO, arguably is the best known fixed-income manager in the United States, if not the world.
If Allianz succeeds in purchasing PIMCO and its parent, PIMCO Advisors LP, at a price of $5 billion, or 2% of the $250 billion in assets under management, Mr. Gross stands to earn an estimated $50 million-plus.
But more than money is at stake for Mr. Gross.
Paul Holt, president of New York-based Cambridge International, a money management consulting firm, sees the possible deal as a "professional growth opportunity" that might not carry the capital with it such as stock, but would be profitable nonetheless.
And a competitor of Mr. Gross' pointed out the bond guru could have left the firm probably 10 years ago a wealthy man, which shows he is not in it just for the money.
That same money manager doesn't foresee Mr. Gross heading up Allianz's investment divisions and being "the grand pooh-bah."
What Mr. Gross and his comrade in arms -- James Muzzy, co-founder and managing director and senior member of PIMCO's investment group -- stand to gain is international reach and distribution far beyond what PIMCO has now.
PIMCO has begun pushing for more international distribution, forming PIMCO Global Advisors, a new division to handle global marketing, client services and investment research. This division is to be led by Mr. Muzzy.
And in April, Christopher Burnham, CEO of Columbus Circle Investors, was named vice chairman of PIMCO Funds Distributors.
Mr. Burnham will oversee international distribution of PIMCO's family of mutual funds.
Allianz has $350 billion in assets under management, primarily for institutions in Germany and the rest of Europe.
PIMCO has $250 billion in assets under management.
For its part, Allianz undoubtedly sees PIMCO as a way to gain a foothold in the United States.
The German insurer already has launched an asset management subsidiary, and is integrating its assets worldwide.
An Allianz spokesman said Chairman Henning Shulte-Noelle intends to make the company one of the top five insurers and asset managers in the United States, United Kingdom and Asian/Pacific markets.
Said competitor Heinz Hockmann, deputy member of the board of managing directors of Commerzbank AG, Frankfurt: "Allianz will be an asset management business with some insurance business."
Still, any PIMCO deal will be complicated by the firm's limited partnership structure and tax issues.
Pacific Life Insurance Co. holds a 33% stake in PIMCO Advisors; PIMCO Holdings owns 44%; and Mr. Gross and other partners own the remainder.
Allianz is seeking to buy PIMCO Advisors LP, the operating parent company.
Benjamin Wei, analyst at Crowell, Weedon & Co., a Los Angeles brokerage firm, doesn't expect Mr. Gross or other executives to take the money and run because the firm has such a strong presence as an institutional bond money manager.
But another industry observer, who refused to be identified, said: "If the true motivation for this acquisition was to achieve distribution they should be willing to do a strategic alliance. . . .
"If part of it is liquidity of stock, then acquisition is better."
PIMCO's U.S. pension fund clients are waiting for the outcome.
"We talked with our account rep, and we're hoping to hear something before too long," said John Stettler, vice president, benefit investments with Georgia-Pacific Corp. in Atlanta.
PIMCO is the $2.2 billion fund's largest manager, he said.
PIMCO runs a $125 million core bond portfolio and a $570 million "stocks plus" portfolio for Georgia-Pacific.
The money is invested in Standard & Poor's 500 futures and then the futures collateral is used to invest in traditional fixed-income assets with a limited duration.
PIMCO "has done a great job for us -- period," Mr. Stettler said.
"I would hope they would put together some kind of announcement before too long," said Mr. Stettler.
