BOSTON - With its recent acquisition of Boston Partners LP, Robeco USA, the fledgling affiliate of Dutch asset manager Robeco Group, has the final piece in place in its quest to build a U.S.-based asset management arm.
Robeco's three-legged stool has Boston Partners, Boston, as the value equity shop; Sage Capital Management LLC, White Plains, N.Y., bought earlier this year, as the hedge fund manager; and Weiss, Peck & Greer, New York, acquired in 1998, as the growth equity shop. Fixed-income capabilities will be culled from Boston Partners and WPG, both of which have fixed-income capabilities.
"We have all the product capabilities in place," said Gery Daeninck, Robeco chief executive officer of Robeco USA, which has about $30 billion in assets under management, about 90% of which is institutional.
Now Robeco faces the daunting task of making its unit work in a crowded marketplace during a market downturn.
Many other mergers and acquisitions have struggled, particularly those involving European parents of U.S. entities.
Consultants say Robeco's U.S. strategy certainly hasn't made the splash of European counterparts like Deutsche Bank AG, Frankfurt; CDC Asset Management, Paris, and UniCredito Italiano SpA, Milan, nor Old Mutual PLC, London, all of which went after bigger chunks of asset management real estate to get a U.S. foothold.
With its modest platform, Robeco hasn't bitten off more than it can chew, said Ben Phillips, consultant with Cerulli Associates Inc., Boston. "They haven't gone in with the elephant gun, they've gone in with the scalpel," said Mr. Phillips.
Mr. Daeninck said the "bootstrap approach" of taking smaller, more manageable steps, differentiates Robeco from other recent acquisitions. He also said the firm has tried to focus acquisitions on strong companies with good track records and avoided discount shops that require turnaround. Also, as a "pure play asset manager" - as opposed to a bank or an insurance company - Robeco has experience in building an asset management operation, said Mr. Daeninck.
And, he noted, Robeco has focused on institutional firms to build its platform. On the retail mutual fund side, Robeco owns a stake in the Toledo, Ohio-based Harbor Funds.
The affiliates will operate autonomously, said Mr. Daeninck, without any changes to the investment management and client service processes. But other functions will be integrated, including sales and marketing.
Mike Jones, head of sales and marketing at Boston Partners, will lead the integrated sales effort at Robeco USA. He will report to Nassos Michas, the chief executive officer at Weiss, Peck & Greer, who has been named CEO of Robeco USA.
Kept 40% stake
While Mr. Michas will lead Robeco USA, Desmond Heathwood, chairman of Boston Partners, will continue to run the firm he founded as general partner. As part of the deal, Boston Partners kept a 40% stake in the company with ownership broadened from the initial 35 equity partners to include an additional 11 equity holders, added when the transaction closed in September. Mr. Heathwood has signed on through the end of 2006. Robeco has an option to purchase the 40% in 2006.
Mr. Heathwood, who formed Boston Partners in 1995 after spinning off from Boston Co. and parent Mellon Financial Corp., said Robeco stood out because of the people and its cultural fit with Boston Partners. He said the two shared a common investment philosophy. Also, a partnership opens doors for Boston Partners to launch an international equity portfolio scheduled for next year.