Russell clients stay put despite looming sale
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • Varagon Capital fills new business development role
      Fitch Group in deal to acquire CreditSights
      Credit managers’ outlook still gloomy but brightening – survey
      Digital Colony picks head of Europe capital formation
    • Will Martindale
      Cardano Group chooses group head of sustainability
      Meketa hires first chief marketing officer
      Nick Horsfall
      Redington names managing directors for investment consulting team
      Marsh & McLennan Agency sets sights on Compass Financial
    • New York State Common challenges Tyson’s dual-share stock structure
      Credit managers’ outlook still gloomy but brightening – survey
      Investors call for action on COVID-19-induced humanitarian crisis at sea
      U.S. jobs worker restaurant
      Job market slipped in December as virus surge hindered activity
    • Ascensus, Empower acquire Truist record-keeping business
      PCS Retirement acquires Alliance Benefit Group-Rocky Mountain
      David Ireland
      Sponsors returning to questions about in-plan annuities
      Shawn O'Brien
      Annuities coming to target-date funds, but not right away
    • New law requires MassPRIM to increase diversity of managers, consultants
      Impact investors getting savvier, more efficient – report
      SSGA alum named head of ESG at Mirova
      Aegon moves to cut carbon from workplace DC business
    • Blackstone holiday video
      Blackstone would like to show you how things are done around the office
      Galina Churkina
      Building research earns honor from Aquila Capital
      MacArthur Foundation invests in women’s safe housing fund
      CAIA’s expansion to online exams yields big results
    • The Sun Hung Kai Properties Ltd. logo is displayed on the Sun Hung Kai Centre building in Hong Kong on Sept. 13, 2018
      SHK spins out East Point Asset Management
      Man holding a business card with Hedge Fund written on it
      Hedge funds chalk up decade’s best returns in 2020 – HFR
      New hedge fund launches surpass liquidations in third quarter
      Michael Hintz
      CQS deal with spinoff team falls apart
    • New York State Common challenges Tyson’s dual-share stock structure
      A sign on the exterior of a Northern Trust Corp. branch in Chicago on July 13, 2017
      Northern Trust to cut 500 jobs
      Wells Fargo targets $8 billion in cuts
      Maine Public Employees boosts target to alternative credit
    • A sign on the exterior of a Northern Trust Corp. branch in Chicago on July 13, 2017
      Northern Trust to cut 500 jobs
      Wells Fargo targets $8 billion in cuts
      A sign at a China Telecom Corp. store in Shanghai on Jan. 6, 2021
      Managers make further divestments from sanctioned Chinese firms
      The Chinese flag flies in front of the Liaison Office of the Central People's Government in Hong Kong on May 22, 2020
      Standard Life Aberdeen JV to open mainland China pension insurance company
    • Maine Public Employees boosts target to alternative credit
      Los Angeles City Deferred Comp narrows list to 2 in manager search
      Connecticut pension fund CIO resigns
      Arizona State Retirement looking for CIO
    • Sharmila Chatterjee Kassam
      AIF Institute hires former Texas ERS deputy CIO as executive director
      Varagon Capital fills new business development role
      SSGA alum named head of ESG at Mirova
      Capital Group hires BlackRock executive to launch ETF unit
    • Pension funds continue private equity investing spree
      Big jump in private equity AUM expected over next 5 years
      Thoma Bravo takes in $22.8 billion for 3 funds
      Jason Thomas
      Data, technology become new prized possessions
    • Ivanhoe Cambridge Inc. signage is displayed outside the company's office near Bay Street in Toronto on Aug. 29, 2011
      Ivanhoe Cambridge, PAG announce joint venture for Japan logistics investments
      Residential buildings in Hong Kong on Feb. 20, 2020
      KKR closes first Asia-Pacific real estate fund at $1.7 billion
      CPPIB in deal with Greystar to develop U.S. housing
      Global real estate investments to hit $79 billion in 2021 – survey
    • Neal and Brady
      Retirement security could be only issue both sides accept
      Retirement cartoon
      Hopes rising for retirement readiness in 2021
      Shawn O'Brien
      Annuities coming to target-date funds, but not right away
      David Ireland
      Sponsors returning to questions about in-plan annuities
    • Outlook 2021
      The top 10 stories of 2020
      The best places to work in money management
      Investment consultants
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • San Jose Federated commits $11 million to real estate fund
      Essex Pension Fund on the lookout for private debt manager
      Lexington Contributory wants large-cap equity manager
      Fort Lauderdale fund scouting for large-cap manager
    • San Jose Federated commits $11 million to real estate fund
      Essex Pension Fund on the lookout for private debt manager
      Lexington Contributory wants large-cap equity manager
      Fort Lauderdale fund scouting for large-cap manager
    • International Small Cap Manager Services
      Financial Expertise
      Passive Index Manager Services
      Emerging Markets Equity Investment Management Services
    • U.S. fixed-income returns post another positive year
      Nasdaq delivers an impressive year
      U.S. dollar's recent decline continues
      Hedge funds warming up to financial sector, remain long U.S. equities
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • Retirement cartoon
      Hopes rising for retirement readiness in 2021
      view gallery
      25 photos
      2020 in editorial Cartoons
      view gallery
      25 photos
      Cartoons depict a year like no other
      Consultants cartoon
      Seeking an investment consultant? Caveat emptor
    • Climate change and emerging markets after Covid-19
      An Asset Owner's Guide to Multi-Manager Portfolio Management
      Research for Institutional Money Management
      The Future of the U.S. Dollar - Dominant currency or one of many?
    • Michael McNally
      Commentary: New ‘investment-plus’ test poses risks to private equity investors
      Adam Waterous
      Commentary: Institutions urged to act now on opportunities created by current global oil disruption
      Ron Lagnado
      Commentary: Straw man critiques don’t hold up in face of real world success
      Robert Raben
      Commentary: What the asset management industry must do to bolster diversity
    • Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
      Focus on manager diversity pushes asset owners’ to walk the talk
    • Sponsored Content By iShares
      ETFs are becoming a cornerstone of insurance equity portfolios
      Sponsored Content By Aberdeen Standard Investments
      Taking a passive approach to the hedge-fund universe
      Sponsored Content By World Gold Council
      Gold: the most effective commodity investment
      Sponsored Content By iShares
      For institutional investors, ETFs can make meeting liquidity needs easier
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • watch video
      1:24
      U.S. stocks were 2020’s comeback kid
      watch video
      1:23
      Outlook 2021
      watch video
      1:52
      Buy gold's pullback?
      Coronavirus and the S&P 500: 2020
    • Getting Back to Normal: How to Creatively Manage Fixed Income Portfolios in a Rising Rate Environment
      What might a Biden DOL and SEC mean for retirement plans?
      Staying on target with target-date funds
      The Institutionalization of Retail Part Two: A Webinar Series from P&I Content Solutions and Chestnut Advisory Group
    • POLL: Retirement issues in 2021
      POLL: Money managers' priority in Asia-Pacific region
      POLL: Retirement issues in the presidential election
      POLL: The S&P 500 in the third quarter
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • Graphic: U.S. stocks were 2020's comeback kid
      U.S. fixed-income returns post another positive year
      By the Numbers
  • Events
    • Conferences
    • Webinars
    • Defined Contribution Spring Virtual Series
      DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • Getting Back to Normal: How to Creatively Manage Fixed Income Portfolios in a Rising Rate Environment
      What might a Biden DOL and SEC mean for retirement plans?
      Staying on target with target-date funds
      The Institutionalization of Retail Part Two: A Webinar Series from P&I Content Solutions and Chestnut Advisory Group
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. MONEY MANAGEMENT
February 23, 2015 12:00 AM

Russell clients stay put despite looming sale

Openness by consulting and money management staff is one big reason

Arleen Jacobius
Sophie Baker
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Grier Eliasek says private equity firms are attracted to asset managers.

    No significant defections at Russell Investments' consulting and money management unit have been reported since parent London Stock Exchange Group PLC first announced it would be buying the firm in June, asset owners and industry insiders say.

    London Stock Exchange executives never made a secret of their plan to potentially sell off the non-index portion of Russell Investments. On Feb. 5, the LSE made it official, and noted it had “a number of expressions of interest” for the business.

    Insiders expect LSE officials to announce by mid-April a $1.2 billion to $1.5 billion price tag for Russell Investments' asset management business.

    Clients contacted by Pensions & Investments are sticking with Russell for now. The majority mentioned how open Russell officials have been about the prospective change in ownership.

    The Boeing Co., for example, has no plans to change. “They have communicated openly about the status of their ownership,” said Bernard Choi, spokesman for Boeing, Chicago. Russell Investments is a consultant for Boeing's $61.1 billion defined benefit and $45 billion defined contribution plans.

    David Graham, communications manager at another Russell client, the $14.4 billion Ohio Police & Fire Pension Fund, Columbus, said in en e-mail: “We expect to continue our current relationship with them. We are aware of the situation and are monitoring. Our contact at Russell is keeping us abreast of the situations.”

    Russell manages $200 million in domestic equities and $450 million in international equities for the Ohio pension fund. It also provides the beta exposure for the pension fund's U.S. equity portable alpha program as well as a derivatives-based international equities exposure and a targeted tracking error securities-based portfolio in non-U.S. equities.

    Staff at another Russell client, the $30.2 billion Indiana Public Retirement System, Indianapolis, “has been in constant communication with Russell regarding possible ownership changes,” Jennifer Dunlap, public information specialist, said in an e-mail. Plan officials will “continue to monitor them closely,” she said.

    March 18 meeting

    Officials at the San Francisco City & County Employees' Retirement System, where Russell helped construct the glidepath for custom target-date funds in its $2.7 billion deferred compensation plan, are expected to discuss Russell's potential ownership change at a March 18 meeting, Norm Nickens, retirement board secretary, said in an e-mail.

    Consultants and competitors, who declined to be identified, also say they haven't seen signs of client defections. “I'm not aware of a single client that is walking away — there is no rush for the door,” said one London-based source in the money management industry.

    Katherine Stouffer, Russell's director of communication, said in a statement: “Institutional investors are continuing to gravitate to a dynamic, multiasset investing approach to help them meet their investment outcomes. As a result, we see ongoing commitment from existing clients as well as interest from prospects.”

    Wait and see

    Some clients are waiting to see who ends up buying Russell Investments' non-index business, sources said.

    LSE executives aren't commenting on the impending sale beyond their Feb. 5 announcement, Mark Benhard, LSE spokesman, said in an e-mail.

    The announcement said after conducting a “comprehensive review focused principally on assessing the strategic fit of Russell Investment Management with the group's long-term strategy,” LSE executives decided to sell it and keep Russell's index business.

    Observers disagree on where private equity firms would fit on a list of potential buyers.

    Some say PE firms are the most likely candidates because they can make attractive returns by restructuring the business, a technique in which several private equity firms have an expertise.

    Possible buyers

    Possible buyers include KKR & Co, Hellman & Friedman LLC, Apollo Global Management LLC, The Carlyle Group LP and Genstar Capital, multiple people said. Officials at KKR, Hellman & Freidman, Carlyle Group and Genstar declined comment. An Apollo spokesman couldn't be reached by press time.

    “Asset management companies have tended to attract a lot of attention from private equity firms,” said Grier Eliasek, president of New York-based business development company Prospect Capital Corp., which finances private equity deals and makes private equity investments.

    Private equity firms are drawn to money managers for the attractive valuations, scalability of the businesses and profit potential, he said. Asset management firms also generally get “decent financing,” he added.

    Donald H. Putnam, managing partner at Grail Partners LLC, San Francisco, said he does not believe a traditional money management firm would bid because of a potential conflict between Russell's consulting business and a money manager's business.

    One problem for a private equity firm is that clients may leave knowing the private equity firm would need to exit the investment, possibly by selling it again in three to five years, sources said.


    See related story: Russell sale by the numbers
    "Robust interest'

    One London-based source in the money management industry noted Russell has just gone through one transaction, which could have already unsettled clients. “If they then go to a private equity group, that would be further unsettling and in three to five years hence, there will (probably) be another transaction,” said the source, who declined to be identified.

    Even so Russell's consulting and money management arm “should be generating some robust interest” from potential buyers including private equity firms, said Peter Lenardos, London-based analyst at RBC Capital Markets. “I think it is going to be a broad set of people looking at the business.”

    “Insurance companies in both Europe and the U.S. with pension solutions businesses — that definitely makes sense. U.S. and Canadian banks will be interested, and U.S. HR firms with employee benefits-type businesses, too,” Mr. Lenardos said.

    European money managers also might be possible buyers, but few have the spare cash, he said.

    Reporter Randy Diamond contributed to this story.

    Related Articles
    Private equity firms expected at head of the line of Russell bidders
    FTSE-Russell index combination will rank third in ETF assets
    New Russell owners likely to keep only indexing unit
    Russell sale by the numbers
    London Stock Exchange on track to sell Russell Investments
    Russell, Ping An end China-based joint venture
    Robeco taps Russell managing director as U.K. institutional head
    Recommended for You
    Northern Trust to cut 500 jobs
    Northern Trust to cut 500 jobs
    Wells Fargo targets $8 billion in cuts
    Wells Fargo targets $8 billion in cuts
    Managers make further divestments from sanctioned Chinese firms
    Managers make further divestments from sanctioned Chinese firms
    Research for Institutional Money Management
    Sponsored Content: Research for Institutional Money Management
    sponsored
    Events
     
     
    Sponsored
    White Papers
    Climate change and emerging markets after Covid-19
    An Asset Owner's Guide to Multi-Manager Portfolio Management
    Research for Institutional Money Management
    Bond ETFs show maturity during Covid market mayhem
    Global gold-backed ETFs: A popular gateway to the gold market
    The Future of the U.S. Dollar - Dominant currency or one of many?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center