HARTFORD, Conn. - Phoenix Investment Partners Ltd. will acquire a majority interest in Kayne Anderson Rudnick Investment Management LLC, Los Angeles. The transaction does not include KA Associates, a broker/dealer, or Kayne Anderson Capital Advisors LP, an alternative investments adviser.
Phoenix initially will purchase 60% of Kayne Anderson Rudnick in a cash payment, based on management fee revenue at the close of the deal, which is expected to happen in the first quarter. Phoenix Investment Partners may pay an additional amount based on management fee revenue growth of Kayne Anderson Rudnick through 2003. Phoenix has the option to increase its ownership stake to 75% by 2007. Kayne Anderson Rudnick management will own the rest of the firm's equity. Further terms were not disclosed.
Kayne Anderson Rudnick manages more than $7 billion for institutional, high-net-worth and wrap-account clients in active, domestic equity and fixed-income securities.
Kayne Anderson Rudnick will operate independently. Key portfolio managers and executives, including CEO Richard Kayne and CIO Allan Rudnick, signed long-term employment contracts with Phoenix.
Phoenix will have 11 asset management subsidiaries with the addition of Kayne Anderson Rudnick.
Phoenix Investment Partners is being represented by De Guardiola Advisors, New York, and Kayne Anderson Rudnick is represented by Putnam Lovell Securities Inc., San Francisco.
Separately, Phoenix completed its acquisition of 65% of Capital West Asset Management, an institutional and high-net-worth manager with $175 million under management. Specific terms were not disclosed. The initial payment will be in cash, and an additional payment may be made depending on Capital West's revenue growth through 2004. Phoenix has an option to acquire an additional 10% of the company by 2006.
Capital West executives hold the remaining interest in the company and will control day-to-day operations. Key executive and portfolio management team members have signed long-term contracts.
Callan, Marquette are finalists for Illinois Teachers' consultant
SPRINGFIELD, Ill. - The $22 billion Teachers' Retirement System of Illinois named Callan Associates and Marquette Associates as finalists for a new investment consultant. Trustees will make a selection Nov. 30. The previous consultant, Strategic Investment Solutions, resigned in the summer.
Study: 4% of defined benefit plans to be bundled by 2003
NEWTON, Mass. - A new Chatham Partners study showed 44% of defined benefit plans will be partially or fully bundled by the end of 2003. Now, one-third of the 45,000 defined benefit plans in the United States are semi- or fully bundled, said Curt Kohlberg, president of Chatham. "Over the past few years, pension plan sponsors have been reducing the number of firms they retain for investment management, actuarial, record-keeping, trust/custody and consulting services in order to lower costs and streamline the administration of these complex plans," said Mr. Kohlberg.
The study estimates $230 billion in defined benefit plan assets will be shifted toward bundling over the next two years, with $1 billion in revenue opportunity at stake for managers.
P&I, Measurisk join forces to offer OpVision
NEW YORK - Pensions & Investments and Measurisk offer OpVision, a new service that measures money managers' operational risks against those of other managers. Asset managers answer more than 100 questions in 14 different categories of operational risk to be ranked relative to other managers. The goal is to provide financial executives and administrators of endowments and foundations with a comparison of the strengths and weaknesses of different investment managers' operational controls and best practices. Money managers pay an annual fee to participate in and update the survey. More than 40 managers have completed the survey to date, all at the request of plan sponsors.
NBP, Goldman Sachs create French manager of managers
PARIS - Natexis Banques Populaires and Goldman Sachs Asset Management launched Asset Square, a manager of managers for French institutional and retail markets. One of the company's first institutional clients will be Interepargne, a subsidiary of NBP specializing in employer-sponsored savings plans, said Philippe Couvrecelle, chief executive for Asset Square. The deal gives GSAM access to a distribution network in France, where it can be difficult to enter the market without a local partner, said Alex Fletcher, GSAM managing director.
Labor Department sues TPL for ERISA violations
ALBUQUERQUE, N.M. - The Labor Department filed suit against TPL Inc., an Albuquerque defense contractor, alleging ERISA violations. According to the suit, filed Oct. 31, trustee and owner Harold M. Stoller formed a partnership with the $1.2 million profit-sharing plan to purchase real estate without a DOL exemption. The suit also alleges the plan guaranteed a real estate loan that allegedly exceeded its partnership interest. The suit asks for an order restoring any losses with interest, undoing any ERISA-prohibited transactions and removing Mr. Stoller as trustee.
LACERS keeps Daiwa as Pacific Basin manager
LOS ANGELES - The Los Angeles City Employees' Retirement System retained Daiwa International to run a $120 million Pacific Basin equity investment portfolio for the $7.8 billion fund for a three-year term.
Florida negotiates with 5 firms for investment providers
TALLAHASSEE, Fla. -Florida State Board of Administration trustees approved negotiating with five bundled investment providers for its new defined contribution plan, set to launch in March. The firms -Prudential, Nationwide, ING Aetna, Fidelity Investments and VALIC - were recommended by the board's investment committees to provide investments and some services to participants in the new 401(a) plan.
The trustees, including Gov. Jeb Bush, also approved negotiating with SAFECO for an open brokerage window for the plan.
LACERA names finalists for private equity adviser
PASADENA, Calif. - The Los Angeles County Employees Retirement Association named Pacific Corporate Group, Pathway Capital Management and incumbent Hamilton Lane Advisors as finalists in its search for a private equity adviser. A selection is expected at the board's Nov. 28 meeting. Currently, the $30.6 billion system has $1.5 billion invested in private equity, said Christopher J. Wagner, investment officer.
Evergreen starts unit focusing on alternatives
CHARLOTTE, N.C. - Evergreen Investments Inc., Charlotte, has launched the Evergreen Alternative Investment Group, which will use a fund-of-funds approach to hedge fund investing. The new unit will fall under the business line headed by Dennis Ferro, chief investment officer at Evergreen Investments. The Evergreen Alternative Investment Group has accumulated $500 million in assets using the fund-of-funds approach. Evergreen has six hedge funds-of-funds portfolios and two private equity funds of funds available to high-net-worth investors and institutions. Bob Storey will lead the distribution effort for the alternative group, reporting to Peter Brennan, national sales manager at Evergreen Investments.
San Diego County to look at its international bond strategies
SAN DIEGO - The San Diego County Employees' Retirement Association may examine its international fixed-income strategies based on a review by custodian Bank of New York. Rogge International runs $196 million in international bonds for the $3.7 billion fund, and Rothschild, $106 million.
N.Y. State Teachers helps finance Calif. office complex
ALBANY, N.Y. - The $80 billion New York State Teachers' Retirement System provided $100 million in financing on behalf of Morgan Guaranty Trust for an office complex in Santa Monica, Calif., said Dave Daly, spokesman for the pension system. Known as The Water Garden, Phase II, the complex consists of two class A office buildings occupying 603,000 square feet. L.J. Melody arranged the financing.
PBGC sets top benefit guarantee at $42,954.60
WASHINGTON - Underfunded single-employer defined benefit plans that terminate in 2002 can receive an annual maximum benefit guarantee of $42,954.60 per participant, or $3,579.55 per month, the PBGC announced. ERISA mandates the maximum, which is adjusted annually and is based on the Social Security contribution and benefit base. The PBGC will publish the 2002 maximum guarantee in the Federal Register Nov. 30.
Pioneer cuts 63 employees due to market correction
BOSTON - Pioneer Investments laid off 63 employees Nov. 14, including an institutional marketer and a portfolio manager, said Tara Pescatore, spokeswoman. She would not disclose their names. Most of the layoffs were from Pioneer's e-commerce area and included retail sales, marketing and shareholder services personnel.
Daniel Geraci, chief executive officer, said the action is due to the recent market correction. "Despite a significant increase in sales, the depressed level of equity markets have put significant pressure on Pioneer's revenues," he said in a statement. Pioneer's assets under management have dropped to $95 billion as of Oct. 31, down from $110 billion at the end of last year.
AIMR: `Trade management process' will quantify total costs
CHARLOTTESVILLE, Va. - AIMR proposed that money managers establish a "trade management process" to quantify their total trading costs. While the proposed guidelines call for firms to establish a process to quantify trading costs over time, they do not recommend a single measurement basis for best execution on a trade-by-trade basis.
The guidelines also recommend that managers disclose their order-routing practices and conflicts of interest, and maintain certain trade-related records.
The Association for Investment Management and Research is seeking comments on the proposed guidelines by Feb. 12. The proposal is published on AIMR's website, www.aimr.org.
Fifth Third merges Kent, Maxus Funds
CINCINNATI - Fifth Third Bank is merging the Kent Funds and the Maxus Funds, which were run by Old Kent and Maxus Investment Group, both acquired by Fifth Third. The newly integrated funds will be Disciplined Value, Broadly Diversified and an expanded fixed-income lineup. Fifth Third now offers 31 funds, up from 16; its fund assets doubled to $12 billion. Fifth Third Asset Management is investment adviser.
1 of 3 Americans owns mutual funds, says ICI
WASHINGTON - One of every three Americans - 93.3 million individuals and 54.8 million households - now owns mutual funds, according to an Investment Company Institute survey. A year ago, 51.7 million households owned mutual funds. The jump is due primarily to the higher number of participants investing through employer-sponsored retirement plans, explained Matthew P. Fink, ICI president. The trade group's survey also found more Americans are investing in mutual funds through individual retirement accounts.