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Thursday, December 11, 2014

Has the LSE Found a Home For Russell's Asset Management?

News summary by MFWire's editors

It looks like the asset management side of Russell Investments [profile] might be owned by someone on this side of the Atlantic again soon.

Matthew Monks, Doug Alexander and John Detrixhe of Bloomberg report that, according to unnamed sources, the Canadian Imperial Bank of Commerce (CIBC) "is weighing a bid for Frank Russell Co's asset-management arm." Those sources estimate that the business could sell for $1.3 billion to $1.5 billion, which works out to 0.473 to 0.545 percent of Russell's $275 billion in assets under management.

In June the London Stock Exchange (LSE) beat six other contenders, reportedly including CIBC itself, and unveiled a $2.7-billion deal to buy all of Russell from Northwestern Mutual. That deal closed this month.

Yet from the beginning the LSE has been specifically interested in Russell's indexing business, not its asset management arm; when the LSE unveiled the deal, they committed to "a comprehensive review of Russell's investment management business." The word on the street over the past six months has been that the LSE would put the Russell asset management business on the block, and now Bloomberg reports that the LSE "is preparing to sell [the Russell asset management business] early next year."

Given Russell's manager-of-managers style of asset management and its large consulting business, buying it might be tricky for another asset manager or investment consultant. One unnamed source told Bloomberg that LSE has been approached by more than 30 potential bidders. Could CIBC, which owns 41 percent of American Century, be the right fit? 

Edited by: Neil Anderson, Managing Editor

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