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Rating:The LSE Promotes Its Fave Russell Brand, Even As the Auction Heats Up Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, April 29, 2015

The LSE Promotes Its Fave Russell Brand, Even As the Auction Heats Up

News summary by MFWire's editors

The folks at the London Stock Exchange (LSE) are getting their Russell Investments [profile] indexing brand out there, even as more bidders emerge for the Russell asset management business.

Arash Massoudi, Joseph Cotterill, and Philip Stafford of the Financial Times report that at least six bidders are now involved in the auction for the $273-billion Russell manager-of-managers business. The FT, citing unnamed sources, adds Ameriprise (which backs mutual fund shop Columbia Threadneedle) and Towers Watson to the list of bidders, while wondering whether CIBC (which is a minority backer of another U.S. fund firm, American Century) is still in the running. And the paper writes that many of the interested private equity bidders "did not make it through after first-bids".

Previously rumored PE bidders for Russell's asset management business include: CVC Capital Partners and KKR (both mentioned in the new FT article), Aquiline Partners, Carlyle Group, Friedman Fleischer & Lowe, Genstar Capital, Stone Point Capital, TA Associates, Thoma Bravo, TPG Capital, and Warburg Pincus. The LSE previously outbid CIBC, CVC, rival indexer MSCI, Silver Lake (another PE firm), TPG, and Warburg when it agreed last summer to pay Northwestern Mutual $2.7 billion for the entirety of Russell, yet the LSE only wants Russell's index business, against which more than $5 trillion in assets are benchmarked. (MFWire previously detailed the existing mutual fund industry connections of the possible Russell PE bidders.)

Meanwhile, yesterday the LSE folks offered a reminder of their prioritization of their index businesses. The LSE's FTSE and Russell index teams hosted a press lunch in midtown Manhattan, with strategists from BofA Merrill, Credit Suisse, and SSgA offering market insight in the context of where indexes like, say, the Russell 2000, are going next and why. The LSE folks succeeded in getting reporters, both investing press and trade press, to write about the event and thus further promote the FTSE and Russell indexing brands.

On the auction front, the FT's unnamed sources wonder if insurance brokers like Aon and Marsh and McLennan will be tempted to follow Towers and get in on the action. (The MFWire has previously pointed to Russell competitors Callan and Wilshire as potential natural bidders, too.)

"The next round of bids is due in the coming weeks," the FT writes, adding that "meetings with the management of Russell have been held in Seattle, Washington, in recent days." The auction officially kicked off at the beginning of February, with Goldman Sachs and J.P. Morgan (and maybe Barclays) being revealed as the LSE's bankers.

MFWire still wonders how a firm like CIBC or Ameriprise, both of which already back asset managers who do their own stock- and bond-picking, could balance that with owning a manager-of-managers like Russell.

The FT estimates that the price in the Russell asset management auction could reach $1.5 billion. Previous reports suggested a price ranging anywhere from $800 million to $1.5 billion

Edited by: Neil Anderson, Managing Editor

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