Fresh from its decision to walk away from the U.S. public pension market, Mercer LLC's investment consulting arm is moving to jump-start a push into the endowment and foundation market with the acquisition of Hammond Associates.
In a Nov. 24 telephone interview — the day Chicago-based Mercer Investment Consulting Inc. announced it would buy St. Louis-based Hammond by year end — Jeffery J. Schutes, Mercer's U.S. investment consulting leader, predicted the combination of Hammond's expertise in serving sophisticated endowment and foundation plans and Mercer's global network and resources would prove powerful.
Terms of the deal were not disclosed.
While Mercer has succeeded in bolstering its alternatives-related research capabilities in recent years, adding Hammond's long experience in market segments such as hedge funds and private equity will “rocket-launch us” in those cutting-edge capabilities, Mr. Schutes said.
In a separate interview, Hammond CEO Dennis R. Hammond, who founded the firm in 1985, said the deal will help provide his team with the “breadth and depth ... critical to having a growing practice” in today's competitive environment.
Corporate pension funds account for the bulk of the $3.7 trillion in global assets under advisement, Mercer reported for Pensions & Investments' latest survey on the investment consulting industry. (See rankings of the leading consultants.)
Hammond, meanwhile had about $47 billion in assets under advisement as of Sept. 30, company officials said. As of June 30, endowments and foundations accounted for 74 and 70, respectively, of the firm's more than 200 clients.
In a news release, M. Michele Burns, Mercer's chairwoman and CEO, cited the planned acquisition as “tangible evidence of Mercer's commitment to our investment business and our determination to increase our U.S. market share.”
The latest move follows a few setbacks in that regard. An ambitious bid by Mercer in early 2009 to create an investment consulting giant in the relatively fragmented U.S. market by acquiring San Francisco-based Callan Associates Inc. fell through at the last minute.
More recently, the firm decided in October to stop serving U.S. public pension plans, reflecting concerns, according to market sources, that those deeply underfunded plans could be tempted to join hands with contingency law firms in targeting Mercer's deep-pocketed parent, Marsh & McLennan Cos. (P&I, Oct. 18). U.S. public pension clients accounted for roughly $240 billion of the $3.7 trillion in global assets under advisement Mercer reported as of June 30.