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Rating:MassMutual Finds an OpFunds Buyer, But ... Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, September 21, 2018

MassMutual Finds an OpFunds Buyer, But ...

News summary by MFWire's editors

Roger Crandall and his team at MassMutual have found a buyer for OppenheimerFunds [profile], but the deal isn't official just yet. Rumor has it there's still at least one sticking point.

Invesco [profile] is poised to buy OpFunds from MassMutual sometime next quarter, MFWire has learned. Word on the mutual fund industry street is the price tag, rumored to be more than $5 billion, has not been agreed to yet.

An OpFunds spokesperson did not immediately return a call for comment. Spokespeople for Invesco and MassMutual both declined to comment on any "market rumors or speculation." In August, the rumor was that Lazard was on board as MassMutual's banker for a possible OpFunds sale.

OpFunds had more than $248 billion in AUM as of the end of August, so that $5-billion rumored price tag would translate into a bit more than two percent of its AUM.

New York City-based OpFunds, founded in 1959 and now led by Art Steinmetz, has more than 2,000 employees, with other offices in Dallas, Denver, Rochester, and Seattle. Atlanta-based Invesco, led by CEO Marty Flanagan, has more than 7,000 employees across 25 countries (including about 250 in New York City, too). And while OpFunds has been owned by mutually owned insurer MassMutual since 1990, Invesco is independent and publicly traded.

Invesco had more than $988 billion in AUM as of the end of August, so an OpFunds deal would push the firm solidly into the exclusive $1-trillion-AUM-and-up club of asset management titans. There are whispers that OpFunds' distribution organization is one of the key factors driving the attractiveness of the deal.

Though Flanagan and his team have been quite acquisitive over the years, this deal would be more than twice as big (by AUM) than Invesco's next-biggest acquisition. In one swoop, it would increase Invesco's AUM by about 25 percent in one swoop.

As MassMutual and Invesco hammer out the details, perhaps other bidders will try to swoop in. Don Putnam, chairman and managing partner of Grail Partners, sees Invesco, Generali (which just backed an asset management bigwig's startup) and Goldman Sachs as some of the "few natural buyers" for OpFunds. Yet he wonders if private equity buyers will stay away this time. And there are other possibilities.

"International players are hampered by all sorts of problems, but Oppie could sure use some help in global distribution, so look for offshore fund houses to be in the hunt (but outgunned, big time)," Putnam tells MFWire. "And maybe just maybe one of the multi-boutiques will play: AMG does not have a huge fund presence outside of AQR (and Oppie is the anti-AQR for sure!), and Natixis is a middling competitor in retail everywhere it plays, so they could bulk up."

Putnam's "favorite buyer," he says, is Goldman Sachs Asset Management, "because they have a lot of high talent research and portfolio management teams and they could reduce redundancies as well as extend product, while significantly increasing retail contribution to the firm P&L. GSAM is a stunted stepbrother today, loved even less than the new retail bank."

"Not that I think they would do it," Putnam says. 

Edited by: Neil Anderson, Managing Editor

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