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Rating:As Expected, Russell's On the Block Again* Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, January 29, 2015

As Expected, Russell's On the Block Again*

News summary by MFWire's editors

The Russell Investments [profile] auction is finally just around the corner.

Jessica Toonkel of Reuters reports that, according to two unnamed sources, next month the London Stock Exchange Group (LSE) will put the manager of managers on the block for $1.4 billion, with Barclays handling the sale. Russell managed $275 billion as of September 30.

Fundsters may not be surprised. Last year the LSE bought all of Russell for $2.7 billion, beating out indexer MSCI, Canadian bank CIBC, and four private equity firms: CVC Capital Partners, Silver Lake, TPG Capital, Warburg Pincus. The prize for the LSE was Russell's indexing business, and the exchange has made no secret of having less interest in hanging on to the asset management side of Russell.

So who might buy? Reuters says at least three bidders, including CIBC as previously reported, are in the mix. The intertwining of Russell's investment consulting business (largely to pension plans and other large institutional investors) and its manager of managers asset management side may make Russell a difficult fit for other asset managers. That pain could even deter CIBC, which already owns a sizable minority stake in another big asset manager, American Century [profile] which unlike Russell generally manages its own money in-house. Why buy it if your other asset management business might have to recuse themselves from searches by Russell's consultants and splitting consulting from investment management isn't an option?

That leaves two logical types of buyers, as far as MFWire can tell: Russell's competitors, and private equity. Note that four big private equity firms were in the running last year for all of Russell. Given the difficulty of fitting Russell with many traditional asset managers, private equity players and Russell's own management could see an opportunity to get a good deal with an MBO freeing Russell from the LSE.

As for competitors, perhaps other big investment consultants with manager of managers of businesses might be interested. Wilshire [profile] has its own multi-manager mutual fund family. Callan has its own multi-manager collective funds for retirement plans, and Callan has shown a strong interest in such like-with-like deals in the past; in 2009, Callan and Mercer almost merged, only to leave each other at the altar. 

Edited by: Neil Anderson, Managing Editor

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