A financial services giant on the other side of the world is about to buy a big, but non-controlling, piece of American Century [profile].

Koji Nagai Nomura Holdings Chief Executive Officer

This morning Japanese multi-national Nomura unveiled a deal to shell out about $1 billion in cash up front to snap up CIBC's 41-percent stake in American Century. The deal, slated to close within the first half of 2016, will also gain Tokyo-based Nomura a 10.1-percent voting interest and two seats on Kansas City, Missouri-based American Century's 11-person board of directors. The Stowers Institute for Medical Research, a cancer-focused non-profit research group created by American Century's late founder, will continue to be the controlling owner of American Century.

The FT reported on the deal. Bloomberg picked up on the deal chatter in advance.

Perella Weinberg Partners and Clifford Chance advised American Century on the Nomura deal. Nomura was advised its own FIG (financial institutions group) banking team in New York City and by Sidley Austin.

Kunio Watanabe Nomura Asset Management President, Chief Executive Officer, Executive Managing Director

Koji Nagai, CEO of the Nomura Group, praises American Century as "a proven and successful investment management company ... [that] has stated its commitment to making a difference in the community through its Profits With a Purpose philosophy."

"The deal represents Nomura's continuing ambition to put clients at the center of everything it does while connecting markets east and west," Nagai states.

Alluding to American Century's special structure that puts control and much of the profits lying with its non-profit medical research sibling, Nomura Asset Management CEO Kunio Watanabe states that his company "respects the value of American Century's corporate philosophy."

Jonathan S. Thomas American Century Investments President, Chief Executive Officer

"By leveraging our new relationship with Nomura, we'll be able to build upon the success of our global business and broaden the array of clients who can access our investment capabilities," states Jonathan Thomas, president and CEO of American Century.

CIBC (the Canadian Imperial Bank of Commerce) bought the stake in August 2011, paying $848 million in cash after American Century's bad breakup with then-backer J.P. Morgan. When CIBC bought in, American Century had $111 billion in AUM. Today's price of about $1 billion is a 17.9-percent increase from CIBC paid four years ago, and in those four years American Century's AUM has risen 34.5 percent to $149.3 billion.

"I want to thank CIBC for what proved to be a mutually beneficial relationship over the past four years," American Century's Thomas states. "Going forward, CIBC remains one of our largest and most-valued clients."

"We have enjoyed a strong and mutually beneficial relationship with American Century, and our minority position in their business has proved to be a very good investment for our shareholders," states Victor Dodig, president and CEO of CIBC. "Recognizing that a path to control was not going to be available over time we made the decision to work with ACI to monetize our investment."

Victor G. Dodig CIBC President, Chief Executive Officer

Indeed, Dodig may be on the hunt for another asset manager to invest in or outright buy. As recently as April CIBC was rumored to be one of the possible bidders for Russell investments. Yet the LSE ended up agreeing to sell Russell to private equity instead, for $1.15 billion.

As for Nomura, the global investment bank is not new to the U.S. asset management business. It previously entered the U.S. retail mutual fund business, only to exit two years ago. Nomura is also one of five multinational banks that back Source, a European ETF shop that has been trying to cross the Atlantic and that has Lee Kranefuss of iShares fame as executive chairman.

Nomura has about $858 billion in client assets and nearly 29,000 employees. It lays claim to 24 percent of Japan's retail investment market, which makes it the biggest mutual fund and investment product distributor in the country.

Nomura has expanded substantially on this side of the Pacific in recent years. It now has about 2,500 people in the Americas, up from 700 or so in 2009, and its Americas HQ has moved from Manhattan's Financial District to Midtown. Yet Nomura's asset management here is primarily institutional, not retail, while American Century has a big retail brand. 

Edited by: Neil Anderson, Managing Editor


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