As expected, Affiliated Managers Group
(AMG) has purchased the fund assets of Fremont Investment Advisors
from the Fremont Group. The San Francisco-based Fremont was put on the auction block more than a year-and-half after the Fremont Group decided to exit the fund business.
The identity of AMG as the buyer was first reported by MFWire.com in early February (see "Could Fremont Funds Have a Buyer?, 2/9/2004
"). Both AMG and Fremont rely on subadvisors to manage their funds. AMG officials said that the deal is being executed under the firm's Managers Funds unit.
, executive vice president in charge of Affiliate Development at AMG said the deal marks the third time AMG purchased an affiliate through The Managers Funds. He added that the Fremont pickup will add complementary products and geographic reach to the Managers Funds and open additional distribution channels.
Fremont's quest for a buyer of the $3 billion of fund assets was given a twist last fall when Fremont Advisors was named as a fund firm that had entered into improper market-timing investments with some investors. That case is still unsettled, although press reports have hinted that an agreement is being worked out. AMG officials said that the deal is contingent on "the satisfactory settlement of the previously announced regulatory inquiries into trading practices at the Fremont Funds." The two parties expect it to close by the end of the year.
The deal brings AMG 13 additional funds. The subadvisors on those funds include Pimco, Evergreen Investment Management and Kern Capital Management. AMG's existing Managers Funds cover 27 funds with roughly $5 billion in assets under management.
AMG officials said that "a significant number" of Fremont's staff and the "vast majority" of its investment professionals and subadvisors, are expected to stay on with The Managers Funds. In addition, The Managers Funds will open an office in San Francisco.
"We view this as a uniquely attractive opportunity for The Managers Funds," said Peter Lebovitz
, president of The Managers Funds. "FIA's use of independent subadvisors and their philosophy of seeking the highest quality investment managers for their funds is entirely consistent with The Managers Funds' approach. The Fremont Funds complement our existing product offerings, and will further enhance our ability to offer institutional and individual investors access to the industry's best investment talent across almost every asset class. In addition, we are enthusiastic about the contributions that FIA's employees will make to The Managers Funds organization."
, CEO of Fremont Investment Advisors also pointed to the firm's similar philosophies in explaining why AMG won the deal. He noted that The Managers Funds "will provide more resources for identifying and monitoring top investment managers and innovative strategies."
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