First Pacific Advisors' principals are likely to exercise an option this year to buy the assets and business of FPA back from parent Old Mutual Asset Management, said Scott Powers, president and CEO of Old Mutual.
In a proxy statement filed with the SEC earlier this week, the boards of directors of the FPA family of mutual funds urged shareholders to approve new advisory agreements with Resolute LLC, a new investment advisory firm set up by key FPA principals to effect that transfer of ownership. The option agreement between FPA and Old Mutual, first revealed in Old Mutual's annual report in February 2005, allows for the new investment advisory agreement with Resolute to take effect Oct. 1, 2006. FPA had just under $10 billion in retail and institutional assets under management as of Nov. 30.
J. Richard Atwood, COO, principal and director with FPA, declined to comment.
FPA has been one of the last Old Mutual subsidiaries to maintain a revenue-sharing arrangement with the parent company, rather than the profit-sharing arrangements that most units adopted after Old Mutual bought United Asset Management's stable of roughly 40 money management firms in late 2000. Mr. Powers said that Old Mutual and FPA didn't share a common vision on how best to create a good strategic alignment.