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Rating:Manning and Napier Invests In a Traditional Shop and Hungers For Alts Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, December 23, 2015

Manning and Napier Invests In a Traditional Shop and Hungers For Alts

Reported by Neil Anderson, Managing Editor

Patrick Cunningham is still on the hunt for asset manager deals, yet for now he and his team are focused on integration.

On Friday Cunningham, CEO of Manning & Napier [profile], unveiled a deal to buy a 75-percent stake in Seattle-based Rainier Investment Management [profile] for an undisclosed amount of cash upfront, plus a four-year earnout. Jim Mikolaichik, chief financial officer of Fairport, New York-based Manning, confirms that Rainier's investment team is "going to be completely autonomous with their investment processes and philosophy.

Patrick Cunningham
Manning & Napier
Chief Executive Officer
"The investment team is going to remain fully intact with the same professionals doing what they're doing today," Mikolaichik tells MFWire. "They're a quality group of people that have been in business for several decades."

The Rainier deal, slated to close in the first half of 2016, will be the second acquisition in the 45-year-old firm's history. For its first, last year Manning bought a managed futures specialist, 2100 Xenon. And Cunningham has since put M&A center stage on his growth agenda for Manning.

Don't expect Manning to rush in to any other deals, at least not yet.

"We're still working through some of the integration points ... We're going to concentrate on making sure we get this done correctly," Mikolaichik says, pointing to the Rainier deal. "We're always open and looking for new opportunities and partnerships."

Further down the line, Mikolaichik sees Manning perhaps leaning more towards buying again in the alternatives space next, given that Rainier and Manning are both more traditional asset managers.

Jim Mikolaichik
Manning & Napier
Chief Financial Officer
As for the Rainier deal itself, Mikolaichik sees "opportunities to cross-pollinate" in terms of distribution, both for Manning and for Rainier. Manning has traditionally had significant defined contribution investment-only (DC I-O) distribution through 401(k)s and other retirement plans, especially with its asset allocation products. Rainier has small and smid cap products that could fit well into 401(k) menus or inside custom target date funds, Mikolaichik says.

And Mikolaichik sees Rainier tapping into distribution possibilities in the wealth advisory and institutional channels, too. Small and smid cap products often face significant capacity constraints, he notes, meaning institutional investors and advisors often need to find more strategies to help fill in for funds that have now closed to new investment.

"There's always searches open for good managers in these spaces," Mikolaichik says.

For Manning's own offerings, Mikolaichik says, the Rainier deal is an opportunity to deepen the firm's distribution reach in the Pacific Northwest.

"There's a nice geographic footprint with some of their distribution team that's exciting for us," Mikolaichik says.

As for the Rainier name, Mikolaichik lauds it as a brand "that's got longevity" and says that Manning wants to keep the Rainier brand. Indeed, key Rainier personnel will still hold 25 percent of Rainier once the deal closes, with the other 75 going to Manning. 

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