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Rating:A Subadvisor With $72B in Mandates Goes Public Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, October 10, 2014

A Subadvisor With $72B in Mandates Goes Public

Reported by Neil Anderson, Managing Editor

A multi-boutique asset manager with $72 billion in subadvisory mandates just went public here in New York.

Yesterday Old Mutual plc (a British and South African multinational bank and insurer) IPOed its London-based, U.S. asset management subsidiary, Old Mutual Asset Management (OMAM), selling 22 million shares, 18.3 percent of OMAM, at $14 per share [see OMAM's prospectus]. That $308 million translated into a starting market cap of $1.68 billion, 0.783 percent of OMAM's $214.9 billion in assets under management as of June 30.

62 percent of OMAM's AUM is institutional, while retail assets (including mutual funds) and "other" clients account for four percent. Yet the subadvisory channel is a big one for the freshly-public asset manager. As of June 30, 34 percent of its AUM was in subadvisory business, and subadvisory business accounted for a whopping 84.6 percent of net inflows for the first half of this year. One OMAM boutique, Barrow, Hanley, Mewhinney & Strauss, accounts for more than 30 of OMAM's 60-plus subadvisory mandates -- it's one of the subadvisors to the Vanguard Windsor Fund.

(OMAM previously sold its Old Mutual Capital-branded retail mutual fund business to Touchstone Investments.)

OMAM's shares fell 0.4 percent yesterday to $13.95, even as the markets shook. (The Dow Jones Industrial average fell 1.94 percent yesterday.) Bloomberg, the Boston Business Journal and the Financial Times all covered OMAM's NYSE debut.

Bank of America Merrill Lynch, Morgan Stanley Citigroup, Credit Suisse, RBC Capital Markets, Wells Fargo Securities, Keefe, Bruyette & Woods, Sandler O'Neill + Partners and Sanford C. Bernstein all underwrote the IPO. They have the option to buy up to 3.3 million more shares (2.75 percent of the company).

OMAM's history dates back to the 1980 creation of United Asset Management, which Old Mutual bought in 2000. Since then OMAM has sold off a number of its boutiques -- Dwight to GSAM, Rogge Global Partners to Old Mutual, and Analytic Investors, Ashfield Capital Partners, Larch Lane Advisors, Lincluden Management, 300 North Capital and 2100 Xenon to the respective boutiques' management teams.

Seven OMAM boutiques remain in the fold:

  • Acadian Asset Management, founded in 1986, a quant, active manager with global and international equity, fixed income and alt strategies, and $71 billion in AUM (33 percent of OMAM's total AUM) as of June 30;

  • Barrow Hanley, founded in 1979, a value equity and fixed income shop with $97.5 billion in AUM (45.4 percent of OMAM's AUM);

  • Campbell Global, founded in 1981, a timberland acquirer, with $6.7 billion in AUM (3.12 percent of OMAM's AUM):

  • Copper Rock, founded in 2005, a growth equity shop specializing in international, global and emerging markets small-cap and mid-cap strategies, with $2.5 billion in AUM (1.12 percent of OMAM's AUM);

  • Heitman, founded in 1966, a real estate investing shop with $24.6 billion in AUM (11.4 percent of OMAM's AUM);

  • Investment Counselors of Maryland, founded in 1972, a value equity shop with an institutional mutual fund and $2.4 billion in AUM (1.12 percent of OMAM's AUM);

  • Thompson, Siegel & Walmsley, founded in 1969, a value shop with U.S. and international equity, fixed income and alt strategies, and with $10.2 billion in AUM (4.75 percent of OMAM's AUM). 

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