Bill Thomas Grail Advisors CEO

Active ETF provider Grail Advisors LLC [see profile] this morning confirmed the buzz regarding its sale to Columbia Management Investments Advisers [see profile]. The deal is expected to close next month. Terms of the transaction were not made public.

Yesterday, InvestmentNews reported that a deal was imminent.

Shareholders of the ETFs will have a special meeting on April 25 to vote on a management agreement with Columbia for each of the ETFs.

Grail's five ETFs have AUM of $23 million.

Grail Advisors CEO Bill Thomas was not available for an interview on Friday, according to a Grail spokesperson, who referred inquiries to Columbia.

"We saw this as a great opportunity to make an aggressive move into the active ETF market," said Chris Thompson, Columbia's head of product and marketing, in an interview with The MFWire.com. "This provides us a quick time to market."

If Columbia were to build an active ETF business from the ground up, "it can be time consuming, around 12 to 18 months," Thompson said.

Asked about what roles Grail CEO Thomas and his team will have at Columbia, Thompson said: "We're in discussions now with employees of Grail."

When the deal is complete, the ETFs will be rebranded with the Columbia name and Columbia will assume portfolio management duties.

The ETFs' current sub-advisors -- American Beacon, RiverPark Advisors and McDonnell Investment Management -- will no longer be involved with the ETFs when the transaction is finished.

"Grail has been a pioneer in developing and marketing actively managed ETFs, and we are pleased to have had the opportunity to work with the company in making these funds available to investors," according to Morty Schaja, CEO of RiverPark, which sub-advises two Grail ETFs. "RiverPark remains committed to the active ETF market. With that in mind, we filed for our own exemptive relief approximately one year ago and plan to return to the ETF space in the future."

He also noted that two of the five mutual funds that RiverPark rolled out last year are managed in a style identical to the Grail RiverPark ETFs.

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Press Release from Grail Advisors

Grail Advisors Announces Record Date for Special Meeting of ETF Shareholders

SAN FRANCISCO, CA -- Grail Advisors, LLC today announced that the firm has entered into an agreement to be acquired by Columbia Management Investment Advisers, LLC.

The transaction is expected to close in May. Terms have not been disclosed.

The Board of Trustees of Grail Advisors ETF Trust has set a record date of April 25, 2011 for shareholders entitled to vote at an upcoming special meeting of shareholders of the ETFs. At the special meeting, shareholders will be asked to approve a new management agreement with Columbia Management Investment Advisers, LLC for each of the ETFs, among other matters.

About Grail Advisors, LLC
Grail Advisors is a San Francisco-based investment advisor created specifically to build and distribute actively-managed Exchange Traded Funds to the global investment community. Known as an innovator in the marketplace, Grail combines the features of the ETF format with the experience of established active investment managers traditionally found in mutual funds and separate accounts. More information is available at www.grailadvisors.com.

Press Release from Columbia Management

Columbia Management To Enter Active ETF Market

BOSTON – April 15, 2011 – Columbia Management Investment Advisers, LLC, today announced an agreement to acquire Grail Advisors, LLC, a registered investment adviser that offers actively managed exchange-traded funds (ETFs). The deal will provide Columbia Management with active ETF capabilities, adding to its broad product line-up. Active ETFs combine the potential benefits of traditional ETF investing with active portfolio management.

The transaction is expected to close in May. Terms are not disclosed.

"This jump starts our entrance into active ETFs," said Colin Moore, chief investment officer of Columbia Management. "It will enhance our already deep product line-up and allow us to reach even more investors with our broad investment management capabilities. We intend to utilize this acquisition to build an extensive offering of actively managed ETFs over time."

"As a leading asset manager, we work with a broad array of valued distribution partners, and we look forward to working with these firms to grow the actively managed ETF market, which can benefit them and their clients," said Mike Jones, president of Columbia Management. "We offer a wide range of product solutions that is strengthened by the addition of active ETFs."

About Columbia Management:
Columbia Management is the seventh largest investment manager of long-term assets in the U.S., with $355 billion in assets under management as of December 31, 2010. For more information, please visit columbiamanagement.com.

 

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