Under the deal between the two Pittsburgh-based companies, $484.9 billion asset manager Federated will acquire nearly $14 billion in assets from PNC: about $9 billion in money market assets, $4.2 billion in equity assets and $700 million in fixed-income assets, a news release said.
The deal is expected to close in the fourth quarter.
On May 1, Pensions & Investments first reported the news that Federated was considering a deal to buy PNC's asset management business in a bid to boost its money market assets.
As of March 31, money market assets represented more than 65% of Federated's total AUM, its first-quarter earnings statement said.
As part of the deal, PNC Capital Advisors' six-person international equity team in Cleveland, including senior vice president Martin Schulz, who is head of the international growth team, will join Federated, a spokesman for Federated confirmed Tuesday.
A spokeswoman for PNC could not immediately be reached for comment.
The PNC Capital Advisors unit is headquartered in Baltimore, according to its most recent Form ADV dated March 29, but the firm has six investment teams across five offices in Baltimore, Chicago, Cleveland, Philadelphia and St. Louis, according to the firm's website.
"PNC's institutional asset management business will now be focused on its core strength: providing comprehensive outsourced chief investment officer services and custom investment solutions to help our clients run their businesses better," said Michael P. Lyons, head of corporate and institutional banking and the asset management group at PNC Financial Services Group, in the news release.
"PNC will continue to proactively deliver value added advice and solutions for our wealth management and institutional clients, leveraging our bespoke investment solutions and strong open architecture platform," he said.
At the close of the deal, PNC Capital Advisors will continue to manage $21 billion in custom liquidity and fixed-income solutions for PNC's corporate and institutional clients as well as $26 billion in OCIO assets through its institutional advisory business, the news release said.
‘Clean, easy integration’
With the acquisition, Federated can make a “clean, easy integration of (PNC’s) money market assets,” while the international equity product could grow significantly with Federated’s distribution resources, said Mark Yancey, managing partner at Plano, Texas-based Attacca International LLC, a corporate development and advisory firm for asset management and other financial services companies.
“The economics were good in terms of the deal they got, and everything was aligned for Federated to make that deal,” Mr. Yancey added.
The deal follows another business unit sell-off for PNC.
On March 12, Walnut Creek, Calif.-based Newport Group Inc. announced that it would acquire PNC Bank’s record-keeping business, Vested Interest. The terms of the transaction were not disclosed, but Vested Interest, which currently provides record-keeping and administration services to plans with about $17 billion in assets under administration, will operate as part of Newport Group once the deal closes, a news release said at the time.