OFI Institutional Asset Management is finalizing an "internal liftout" of 15 investment professionals and almost $5 billion in long-only equity assets from sister company Babson Capital Management, said Chuck McKenzie, OFI's chief executive and chairman.
Pending final details, the transfer will bring Babson's small-cap and midcap value team, led by Lance James and Steve Kylander, and its small-cap and midcap core growth team, led by Dan Goldfarb and Steve Dray, to OFI. The value team manages roughly $1 billion, while the growth team runs a little more than $2 billion, Mr. McKenzie said in an interview. OFI's existing large-cap value team, led by Chris Levy, will absorb $1.5 billion in large-cap value equity mandates that Babson has been managing, he said.
"We will integrate the Babson investment capabilities into our existing systems," with the goal of assuring clients and consultants that they will see no changes in investment teams or the way their mandates are being managed, Mr. McKenzie said.
The "friendly transaction" between the two Massachusetts Mutual Life Insurance subsidiaries fits the longer-term strategy of each: OFI, with its focus on benchmark-driven strategies, will gain the value, core and growth small-cap and midcap equity capabilities it has been seeking to round out its product lineup, while Babson can sharpen its focus on the alternative investments and absolute-return products it sees as its competitive advantage, Mr. McKenzie said.
In addition, Babson is looking to sell its private client business, which manages $1.5 billion in assets, including the firm's large-cap growth team, said Faith Yando, a spokeswoman for the company.