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Rating:FRC Restructures and Sells Its Product Lines Not Rated 3.0 Email Routing List Email & Route  Print Print
Monday, October 10, 2011

FRC Restructures and Sells Its Product Lines

Reported by Neil Anderson, Managing Editor

Financial Research Corporation (FRC) is restructuring, and it looks like one of its competitors will buy most of FRC's product lines. Jason Cassidy, senior vice president of strategy and development at Strategic Insight parent Asset International confirmed that his firm is "looking to buy certain pieces of the FRC business and take certain employees who are associated with those product lines," namely FRC's 529, alternatives, lifecycyle (i.e. target date), market sizing, monitor and sub-advised research units.

Avi Nachmany of Strategic Insight did not immediately respond to a request for comment. AI chairman and CEO Jim Casella referred inquiries to Cassidy.

FRC previously transitioned ownership into the hands of a group of private investors, including chairman Bob Hedges and other FRC employees, and former FRC parent Mercatus sold to AlixPartners this summer [see MFWire.com, 8/11/2011]. Then last week MFWire.com broke the news that AI was, in Cassidy's words, "in conversations with FRC about buying select assets from them" [see MFWire.com, 10/4/2011].

Now Cassidy confirmed the specific product lines in question (which notably do not include FRC's research unit focused on retirement) while cautioning that the process is "clearly very dependent on the restructuring that they're going through," which in turn is in the hands of the U.S. Bankruptcy Court for the District of Massachusetts.

"They fill in some areas that we see as growth opportunities," Cassidy told MFWire.com, while referring inquiries about FRC's restructuring to FRC itself.

Bob Jenkins, president of FRC, told MFWire.com that "there should be no disruption" for the six business lines AI plans to acquire, pending court approval, and that the products will retain the FRC brand. AI has a Boston office, located down the street from FRC, which it opened this spring.

"It's a great fit They're a great partner," Jenkins said. "It's kind of business as usual for the teams tied to those products."

When asked about the chapter 11 bankruptcy process, Jenkins confirmed that FRC "is going through a corporate restructuring" which, like the deal process with AI, officially began last week. Jenkins also confided that, while he will continue to lead the firm through the restructuring, he will not be joining AI as part of the deal. Jenkins aims to continue to work on the consulting side of the mutual fund world.

According to court documents, FRC counts between 50 and 99 creditors, between $500,001 and $1 million in assets, and between $1 million and $10 million in liabilities.

Neil Bathon founded FRC more than 20 years ago, then sold it to Bisys in 2001. When Bisys split in two in 2007, Citigroup gobbled FRC while taking on Bisys' mutual fund back office business. Citi sold FRC to Mercatus in 2008. 

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