(SoGen) is taking another step into the US asset management business with its purchase of a stake in the TCW Group
. The French bank will acquire 70 percent of the
Los Angeles-based firm over the next five years.
TCW had been one of the higher profile fund firms on the block since word that it was for sale first circulated roughly a year ago. With its acquisition, Liberty Financial remains the highest profile fund manager openly shopping itself.
Despite the fact that industry insiders knew about TCW's sale status, Robert A. Day
, founder, chairman and chief executive officer of TCW, denied that the firm had sought SoGen as a buyer.
"This is not a transaction we sought out, but the deal has so many advantages - and the chemistry and strategic fit with our new partners is so good - that it only made sense to pursue it. This transaction gives us an international distribution platform and the means to grow and help drive the overall growth of SG Asset Management," he stated.
Both firms added that TCW will remain independent in its management structure and that the acquisition will not effect TCW's personnel.
One reason SoGen may have been interested in TCW was because of its existing narrow niche in the the US business, explained Burton Greenwald
, managing director at Philadelphia-based B.J. Greenwald Associates
He noted that SoGen funds have been a classic value investing shop with limited market reach in the US and that the firm sold that business to Arnhold Bleichroder (it is now First Eagle Funds). Meanwhile, TCW has a substantial institutional and high-net-worth business. "There is an aura of credibility attached to American investment resources as you go around the world," explained Greenwald. Adding this aura makes it "absolutely essential to have investment resources in the US" for firms such as SoGen.
As for TCW, the firm gains a "large diversified group of portfolio managers and research capabilities that cover the whole spectrum and and a fairly significant high net worth business." He notes that the high-net-worth market provides higher fees than the institutional business and is less performance centered than other segments."
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