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Rating:UPDATE 1| Rydex Says Yes to Security Benefit Not Rated 3.2 Email Routing List Email & Route  Print Print
Thursday, June 28, 2007

UPDATE 1| Rydex Says Yes to Security Benefit

Reported by Erin Kello

Kris Robbins, CEO of Security Benefit, and the Viragh Trust, which owns Rydex Investments, have sealed their deal.

The MFWire first reported that a deal was in the works last April, (See: Rydex' Sale: Will the Best Man Win?). That the long-expected deal is finally complete became known when the two companies issued a press release Thursday morning confirming the mutual fund firm's sale. Neither party discussed the price tag on the sale, but Security Benefit spokesman, Gregg Rosenberg, tells the MFWire that it was a full sale, not just an controlling interest.

SB's Robbins championed the deal Thursday morning, explaining that it "strengthens our overall fundamentals that support continued growth in our expanding global investment business."

"The combination of Security Benefit and Rydex Investments leverages an existing successful relationship into a catalyst for broader solutions, through, sophisticated asset and risk management skills, comprehensive products options and choices and an ever-widening array for traditional and non-traditional capabilities," Robbins said.

SB's top executives were in the air Thursday morning and unavailable for follow up comments.

Kris Robbins
Security Benefit Group of Companies
Prior to the Rydex deal, the former Providian M&A pro had doubled Security Benefit's size, growing its assets under management (AUM) to $15 billion from 1998 to 2000.

Put together, the two asset managers will control roughly $35 billion in assets under management and $52 billion of assets under administration at closing.

According to fund industry insiders, this is not the first fund firm that SB has looked at buying.

Rydex was founded in 1993 by Skip Viragh, with a vision of giving more power to the investor. Viragh started with only two employees and one fund, the Rydex Nova Fund. Today Rydex has more that 80 mutual and exchange-traded funds in its line-up.

Viragh passed away in 2003 from after a battle with pancreatic cancer. After Viragh's death, Rydex was inherited by his trust, which is run by his siblings, according to industry sources.

Last fall those family members began the sale process by retaining Goldman Sachs as a banker.

Since then there have been many rumored buyers for the company with a price tag somewhere between $400 and $600 million.

The lawyers advising Security Benefit in the deal are Debevoise & Plimpton. The Debevoise team is led by partner Robert F. Quaintance, Jr.

Though it is now a part of Security Benefit, Rydex's CEO, Carl Verboncoeur and the management team will retain their positions. The company will also continue operating from its Rockville, Maryland home as a new and separate line of business.

Verboncoeur was upbeat about the sale and Rydex's role as one of Security Benefit's holdings.

"Rydex will benefit from Security Benefit's proven, well-developed and expanding distribution platforms to accelerate new business development and growth," said Verboncoeur. "With their resources and market place competence, this partnership will enable us to expand our business while retaining our competency for innovation and our focus on institutional style investment products for clients."

Earlier, the MFWire reported that the finalists in the bidding were Man Group, IXIS, GTCR Golder Rauner, a Chicago-based private equity firm, and Invesco. Published reports also named E*trade as a finalist in the auction. However, no source familiar with the sales process named E*trade as one of the bidders in interviews with the MFWire

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