CINCINNATI — Fund Evaluation Group was acquired by the firm's executives from parent Old National Bancorp, said Scott Harsh, Fund Evaluation president and chief executive officer. Terms were not disclosed. Mr. Harsh said FEG's management team late last year began discussing the buyout with Old National executives, who wanted to focus more on the company's strategic banking business. "Our desire to become a high-performing community bank continues to drive our strategic decisions," Bob Jones, Old National Bancorp president and CEO, said in a news release. Fund Evaluation, an investment consulting firm acquired by Old National in 2002, can function best as an "independent and objective adviser" and an employee-owned firm, Mr. Harsh said. The acquisition should be completed by Sept. 30.
Fund Evaluation Group managers buy out firm
SACRAMENTO, Calif. — CalSTRS expanded its credit enhancement program to include transactions nationwide, said Sherry Reser, spokeswoman. The program had only taken account transactions within California, Oregon and Nevada. As a result, the $133 billion California State Teachers' Retirement System, Sacramento, will gain more fee revenue, Christopher Ailman, chief investment officer, said in a news release. Fee income from the credit enhancement program totaled $5.8 million as of March 2005, up from $2 million in January 2000, Ms. Reser said. She declined to comment on future revenue expectations.
The program enables municipal debt issuers to substitute their lower credit rating for CalSTRS' higher credit rating through a letter of credit, line of credit or liquidity enhancement. It gives municipal agencies access to the capital markets and a lower interest rate on their debt. CalSTRS lends its credit rating to municipalities, local government entities, service districts, non-profit organizations and state agencies.
Separately, the CalSTRS board on Sept. 8 deferred a decision regarding changes to its $31.6 billion fixed-income portfolio for "further discussion and possible action" at a Dec. 7 investment committee meeting, said Ms. Reser. CalSTRS staff recommended shifting the fixed-income target to 70% internally managed core and 30% externally managed opportunistic over the next three years, from 95% and 5%, respectively, according to a memo to the board.
The possible shift could result in new managers being hired, according to Ms. Reser, who noted it's too early to discuss when any RFPs would be issued. With any kind of policy change, the board "takes a conservative view and takes time in making decisions," Ms. Reser said.
E.I. du Pont de Nemours & Co., Wilmington, Del., made a $1 billion voluntary contribution to its principal U.S. pension plan, according to a statement issued by the company. "Given the current low interest rate environment, we decided it was financially prudent to make a voluntary contribution at this time," John Jessup, vice president and treasurer, said in the statement. Lori Captain, DuPont spokeswoman, said company officials decided to borrow funds to finance the contribution.
David Peet, DuPont director of investor relations, said company officials announced late last year that they "expected to have the opportunity" to make a voluntary pension contribution to the principal U.S. plan in 2005, but an amount wasn't specified at the time. No contributions to the principal U.S. plan were required this year.
DuPont had about $18.3 billion in combined pension assets as of Dec. 31, and the plans were underfunded by a combined $3.5 billion at the end of 2004, according to the company's annual report.
Separately, Citigroup Inc., New York, expects to make $173 million in discretionary contributions to its U.S. pension plan this year, according to the firm's latest 8-K filing. The company also expects to contribute an additional $72 million to its non-U.S. plans this year. Citigroup contributed $400 million in 2004 to the U.S. pension plan to avoid an additional minimum liability, the filing stated. Shannon Bell, Citigroup spokeswoman, did not return calls for comment by press time. Citigroup had $9.4 billion in defined benefit assets as of Sept. 30, 2004, according to a Pensions & Investments estimate.
PITTSBURGH — Mellon Financial Corp. on Sept. 8 agreed to acquire the remaining 50% of its joint venture with Russell Investment Group for an undisclosed sum, confirmed John L. Klinck Jr., Mellon vice chairman and president of its investment management unit.
"We'll be able to really advance our strategic platform between this business and the other part of Mellon," Mr. Klinck said in an interview. "We'll continue to invest and strengthen the relationship between this business and our core custody business. We've been doing that as a joint venture, and now with 100%, we can strengthen those relationships even further.
For Russell/Mellon clients, he said, "it is business as usual. The existing platform of products and services continues tomorrow just as it does today."
The acquisition was not part of a larger strategy to make the company more attractive to a potential suitor, he said. "This is not such a large transaction that it transforms Mellon," Mr. Klinck said, adding the deal has been in the works for a couple of months. "Mellon has been extremely clear about its strategy for a number of years, and this is another step along the same path."
ST. LOUIS — Falcon Products Inc. asked the court overseeing its Chapter 11 bankruptcy reorganization to approve the termination of its three pension plans, according to court papers.
In a motion filed with U.S. Bankruptcy Court in St. Louis, Falcon Products said its proposed reorganization plan is conditioned "on the elimination of all or virtually all of (the company's) unsecured obligations, including the underfunding obligation to the pension plans." Falcon Products, which filed for bankruptcy protection in January, received court approval of the reorganization plan's disclosure statement Aug. 29; a confirmation hearing is slated for Oct. 6.
The three pension plans had a combined $28.6 million in assets as of Nov. 1, 2003, according to the company's latest annual report. The plans are underfunded by $33.8 million, according to court papers. Neal Restivo, the company's CFO, did not return a call by press time.
The bankruptcy court scheduled a hearing for Sept. 23.
Jeffrey Speicher, a PBGC spokesman, said Falcon Products proposed terminating the plans retroactive to Aug. 31. He said agency officials have not determined how much in plan liabilities the PBGC would assume.
DALLAS — L&B Realty Advisors' senior executives acquired the firm from Old Mutual in a management buyout, said G. Andrews Smith, L&B chairman and CEO. Terms of the deal, which closed Aug. 31, were not disclosed. Mr. Smith and Daniel L. Plumlee, president and CIO, each acquired 50% of the firm, said Mr. Smith.
Ownership "is something we never had," he said. "Now having that that currency, so to speak, we hope to leverage off it and make it available to other senior executives."
Mr. Smith said he and Mr. Plumlee and Old Mutual didn't use financial advisers, borrowing or third-party investors to complete the deal.
Mr. Smith said he and Mr. Plumlee have tried to buy L&B since 1999, when the firm was owned by United Asset Management. "Quite frankly it took awhile" to close the deal, he said.
He said 98% of the firm's clients have endorsed the deal; the other 2%, which are small clients, have not responded.
"This is the model investors want to see, where the manager goes home at night worried about those accounts" because he is a principal in the business, Mr. Smith said.
NEW YORK — GovernanceMetrics International gave its highest rating of corporate governance attributes to 33 companies — 22 from the United States, seven from Canada, and two each from Australia and the United Kingdom, according to semiannual ratings on more than 3,200 global companies released today. The 33 companies each earned a rating of 10. As a group, they "outperformed the S&P 500 index as measured by total shareholder returns for each of the last one-, three- and five-year periods ending Sept. 1," beating the S&P 500 by 11.40, 6.09 and 15.19 percentage points, respectively, according to a GMI statement.
In general, companies with good corporate governance ratings of nine or more returned an average of 15.93% for the year, compared with 8.73% for companies with poor ratings of three or lower, the statement said.
Tyco International Ltd. had the most improved rating, moving to nine from 1.5 at the end of 2002 because of a wide range of governance reforms, GMI said.
About 1%, or 32, companies were rated one, the lowest rating on GMI's scale, said Gavin Anderson, GMI chief executive officer.
SANTA FE, N.M. — The Public Employees Retirement Association of New Mexico authorized the use of futures and options in its $7.1 billion equity portfolio for risk control and the use of derivatives in its $3.4 billion fixed-income portfolio to manage duration.
Separately, the board dropped the $10.5 billion system's assumed inflation rate to 4.5% from 5%, as a result of a four-year experience study conducted by actuary Gabriel Roeder Smith. The assumed investment return was kept at 8%, said Terry Slattery, executive director. The entire pension plan earned 9.8% in the fiscal year ended June 30, Mr. Slattery said.
DENVER — The Denver Employees Retirement Plan is searching for a non-core real estate manager to run $10 million, said Steven Hutt, executive director. Townsend Group, specialty real estate consultant for the $1.7 billion plan, will be coordinating the process, Mr. Hutt said. There will be no RFP, he said; Townsend will screen candidates and make recommendations to the plan. The system is shifting its overall real estate portfolio to 60% core/40% non-core, from 70% core/30% non-core. Real estate makes up about 10% of total plan assets.
Separately, the plan will initiate a securities lending program with global custodian JPMorgan Chase, with a target start date of Oct. 1, said Mr. Hutt. "We anticipate average net annual revenue from the lending program of approximately $500,000," he said.
NEW YORK — Dow Jones Indexes on Sept. 13 launched the Euro Currency and Euro Currency 5 indexes, confirmed John Prestbo, editor of Dow Jones Indexes. The indexes measure the value of the euro by tracking the exchange rates of major currencies. The Dow Jones Euro Currency measures changes in the value of the euro by tracking its exchange rates against 10 currencies. Its subset, the Dow Jones Euro Currency 5 index, measures the value of the euro against the five most liquid currencies. "The immediate target is the financial community, dominated by investors and people who service investors," Mr. Prestbo said. "If there's acceptance of these indexes, that's where it will start."