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Rating:SocGen Denies TCW Sale: Bankers Say Morgan Stanley is Making the Rounds Not Rated 3.0 Email Routing List Email & Route  Print Print
Thursday, December 01, 2011

SocGen Denies TCW Sale: Bankers Say Morgan Stanley is Making the Rounds

News summary by MFWire's editors

Top officials at Societe Generale have repeated their denials that they are shopping TCW Group [profile]. The Los Angeles Times published the denial Thursday morning. The report added that TCW Group officials declined to comment on a report that was published by Bloomberg.

The denials ring hollow, however, as deal makers specialized in the mutual fund business have said that Morgan Stanley bankers have held informal discussions with as many as half a dozen parties to discuss what the business would be worth. The business appears to be worth anywhere from $700 million to $1 billion (see MFWire's coverage).

SocGen's denial reiterated that its plans for a TCW Group IPO hace not changed:
TCW is not for sale and we continue to believe that TCW is on a trajectory for strong and sustained growth. Societe Generale Group fully supports (CEO) Marc Stern and the board of directors of TCW in the firm's development strategy. As has been said previously, the firm is on track for an IPO in the next two to three years.
Yet, one banker told MFWire that a key roadblock to a sale was removed last quarter when SocGen wrote down the goodwill it carries on TCW Group to just $750 million from $1 billion.

French officials are said to be pressing SocGen to sell assets to raise capital, and SocGen officials have admitted that they are exploring the sale of assets unrelated to TCW Group. The need for capital by European banks is not a surprise and last week Germany's Deutsche Bank confirmed that it is exploring a sale of its U.S. asset management business. Four mutual fund firms are reportedly interested in that business (see MFWire.com's coverage).

Another factor driving SocGen to consider a sale of TCW, say sources, is the $66.7 million judgement TCW suffered in its recent lawsuit brought against TCW defector Jeffrey Gundlach and his DoubleLine Capital [profile] colleagues. That case, and the poor publicity it brought, has raised questions about Marc Stern's judgement, says one banker.

DoubleLine has been one of the fastest growing mutual fund firms since its founding more than 18 months ago, adding an average of roughly $1 billion of mutual fund assets per month.

Meanwhile, TCW Group's mutual funds have done nearly as well. So far in 2011 TCW has seen nearly $7 billion in net inflows, according to the Los Angeles-based mutual fund firm.

The inflows, combined with the addition of MetWest's $10 billion in mutual fund assets almost two years ago, have pushed TCW to $33 billion in mutual fund AUM. That's three times the $9.7 billion in mutual fund assets TCW (sans MetWest) boasted at the end of 2009.

That makes TCW Group the twelfth fastest growing mutual fund complex as measured by Strategic Insight.

Today TCW also took the wraps off its newest mutual fund: TCW Global Bond Fund. The fund is a response to demand and strong inflows, stated Chuck Baldiswieler, President and CEO of TCW Funds.

Tad Rivelle, TCW's chief investment officer for fixed income, and Stephen Kane will co-manage the fund along with David Robbins, portfolio manager of the TCW Emerging Markets Income Fund

Edited by: Sean Hanna, Editor in Chief


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