Ben Bruck joined Macquarie Bank in Sydney as a risk manager close to 20 years ago, when it was simply a large Australian bank with a domestic asset management business. During the course of his career, he has had a front-row seat for the bank's expansion into global investment management. No wonder the investment executive — who initially studied genetic engineering and molecular biology — has remained with Macquarie.
Mr. Bruck now is an executive director and oversees three divisions within Macquarie Funds Group, the company's securities asset management business. In this position, he manages Macquarie's Fixed Income Currency & Commodities Asset Management, Private Equity Fund-of-Funds and Macquarie Affiliated Managers. Mr. Bruck helped put together Macquarie's acquisition of Delaware Investments from Lincoln Financial Group. When the Delaware purchase closes, expected in January, Macquarie Group will bump up its combined institutional and retail assets under management by $129.7 billion to $305 billion. The acquisition will more than double the total assets in the Macquarie Funds Group, to $197 billion from $67 billion. This is a significant step up for Macquarie's investment management business, which has been best known in the U.S. for its infrastructure investments. When the deal closes, the headquarters of Macquarie Funds Group will move to Philadelphia from New York; Mr. Bruck and his family will move to Philadelphia from Sydney.
Macquarie officials have not finished the company's transformation to a global broad-based asset management business. Mr. Bruck says Macquarie is in the market to acquire more firms, either boutiques or spinoffs from larger institutions, to fill holes in its institutional investment lineup.
What is Macquarie's strategy regarding its investment management business? We have capital, and we are committed to supporting our investment business by deploying that capital. Conceptually, we are always open to opportunities to add to what we currently do. However, the immediate priority is to successfully implement what we have commenced with Delaware. Down the track, I'm sure we will continue to explore new opportunities. It's always hard to predict what that might bring, but I suspect the most likely candidates, in the U.S. at least, will be smaller specialist businesses that can add to, and ultimately benefit from, the substantial operational infrastructure that Delaware possesses. The yearlong search that yielded Delaware for us also threw up many such candidates, and we will maintain contact with some of those firms to see what might be possible. Further afield, especially in Europe and Asia, we will continue to build relationships with financial institutions (that) may one day see benefits from partnering with us in the asset management business.
Can you describe the possible U.S. acquisition candidates? During the yearlong search, lots of other opportunities came up as well (as Delaware Investments) and among the opportunities that were very interesting was a handful of specialist firms, a half-dozen firms that we are going to maintain a dialogue with. Some are in alternative investments. Another category is a specialized firm that does something essentially different than what either Macquarie or Delaware do. The firms are all considerably smaller than Delaware.
What stands out in your long career at Macquarie? The most interesting was in the mid-1990s when I set off abroad and I was charged with finding places to take the business. I started in Asia with small acquisitions. It was a fantastic experience. It was a challenge of making a series of businesses work in places like Malaysia and Taiwan. I was thrown in the deep end in my late 20s. In the end, we proved quite successfully we could build out businesses in these countries, and we took some of the same principles to a much bigger market in the U.S.
How big were those first acquisitions in Asia? We started in Asia with businesses with single-billion assets under management. The largest was about US$10 billion to US$13 billion. What's in common with all of them is that the first and most important aspect of our business strategy is that we have to feel we could help, that we could make a difference and help that business achieve more — such as providing new solutions for its clients or expanding its footprint. We look to see if we can help that business in a meaningful way. It's the same process that led to Delaware. Ultimately, we're not a company driven largely by acquisitions. Most of the growth is organic. With Delaware, we hoped to help Delaware take its best and most internationally relevant investment solutions outside the U.S. We have a broad network of offices in most countries.
How is the Delaware acquisition going? Firstly, all the things that motivated us to buy the company are being confirmed to us as key strengths. Delaware has a well-entrenched, diversified U.S. business with access to all channels, a robust risk management and fiduciary culture. Delaware is complementary to us in both capabilities and footprint, and it has a management team with deep experience, dedication and expertise.
More specifically, we've made progress with Delaware and Lincoln teams as we work towards the closing. The entire management team will remain in place under (Delaware Investments President) Pat Coyne. We'll bring in 10 to 20 additional Macquarie staff in specialist roles designed to link the firm with Macquarie. We're at the halfway implementation point and there are no red flags. Opportunities have already been identified to give Delaware investors access to Macquarie products such as real assets and other alternatives, and Macquarie investors access to Delaware products such as global growth equities.
Pat and his senior team have just returned from a global tour of Macquarie's regional offices, and the senior Macquarie team has visited all of Delaware Investments' offices. Good relationships are being built across the firm at every level, and there are opportunities to help each other in certain overlapping areas. Delaware can help with U.S. fixed income; Macquarie can assist with global REITs.
How has the strategy changed since Macquarie first established a U.S. business? Where do infrastructure and real estate fit? In my role, I can speak for the securities asset management business of Macquarie, which includes infrastructure securities and real estate securities, as opposed to direct investments in those sectors. In securities asset management, our overarching strategy has been to offer U.S. investors investment strategies that are unique and differentiated. I see this as remaining unchanged. But of course the Delaware acquisition takes that to a completely new level of scale and commitment.
What do you see as trends in the broader industry? I don't believe that consolidation is, or ever will be, a one-way trend in the asset management industry. Rather, I see a continuous cycle of aggregation at the bigger end, offset by the formation of boutiques at the smaller end. This is fundamental to what makes our industry so exciting. The same is true of asset classes. As the capital markets continually innovate and evolve, investors respond by bucketing assets into new categories and groups.
Speaking more specifically and short-term, however, I believe fixed-income solutions will continue to be in strong demand next year. As confidence improves, the cash that is currently flowing into fixed income in such large volumes will begin to seek growth opportunities again.
