Allianz Global Investors will sell its majority stake in Cadence Capital Management in a management buyout. Executives of Cadence Capital along with private equity firm Rosemont Partners will acquire Allianz's 75% interest in the firm.
Mike Skillman, CEO of Cadence Capital, said the transaction will allow Cadence to function as an independent investment entity run entirely by its internal management team. Cadence Capital executives will hold a 51% stake in the firm, while Rosemont Partners will own the remaining 49%. Mr. Skillman declined to discuss the financial terms of the transaction. "A financial partner like Rosemont was clearly the best option for us," he added. "They understand the industry and the business, but they also understand our need to operate our investments autonomously."
Cadence Capital executives have been seeking to buy Allianz's shares in the firm for the last 12 to 18 months, Mr. Skillman said. Allianz, which acquired its stake in Cadence as part of Allianz's 1999 acquisition of Pacific Asset Management, may have sought to either spin off the equity shop or further integrate Cadence into its own investment operations, he said.
As part of the agreement, Cadence Capital will manage $2.4 billion in four subadvised mutual funds for Allianz. Cadence currently manages about $3.5 billion in institutional separate accounts and $2.5 billion in mutual funds. Roughly 80% of the mutual fund assets are institutional, according to Mr. Skillman.