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Rating:Eaton Vance to Buy Bulk of SMA Player Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, June 05, 2003

Eaton Vance to Buy Bulk of SMA Player

by: Ki Kim

Boston-based Eaton Vance has signed a deal to buy 80 percent of the stock of Parametric Portfolio Associates for $28 million in cash. Easton Vance is an investment management firm with $62 billion in assets under management, while Seattle-based Parametric reports about $4.7 billion in assets under management. Parametrics' main business is managing separate accounts for high net-worth investors, using proprietary systems to customize client portfolios.

"This is an important strategic acquisition for Eaton Vance. It enhances and diversifies our leadership position in tax-managed investing, and it significantly increases our presence and potential in the market for separately managed accounts," said James B. Hawkes, chairman and CEO of Eaton Vance Corp.

"We believe that Parametric's reputation as a leader in customized portfolio technology, its strong investment performance record, and its key business relationships, when combined with Eaton Vance's powerful distribution system and other resources, create a unique potential for growth."

Shareholders of the remaining 20 percent, Parametric's current investors and key executives, will have annual rights beginning in 2006 to sell their shares to Eaton Vance, and EV will also retain certain rights to buy such shares over an eight-year period at prices based on a multiple of Parametric's prior year's EBIT.

Eaton Vance does not expect the transaction to be dilutive to earnings for its current fiscal year ending October 31, 2003, and expects it to add to EPS in future years. The Board of Directors of EV and Parametric's shareholders have approved the acquisition, which is slated to close in August.

CEO Brian Langstraat and CIO David M. Stein lead Parametric, which was founded in 1987. The firm is owned through a holding company whose shareholders include Orca Bay Partners and by Parametric's senior management and other key employees. Parametric will become an Eaton Vance subsidiary and will operate as an autonomous business unit out of Seattle. UBS Warburg acted as financial advisor to EV, while Berkshire Capital Corporation advised Parametric.

All members of Parametric's management team will continue in their current capacities and sign long-term employment contracts, and all employees will become shareholders of Eaton Vance.

In 2001, EV acquired majority interests in Atlanta Capital Management Company and Fox Asset Management, both of which target the SMA market. EV also provides investment products for the SMA market. All told, EV and its affiliates have more than $11 billion in institutional, high net-worth and retail managed accounts and participate in over 40 broker-dealer managed account programs. 

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