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Rating:Needles Makes American Beacon's 2nd Deal Ever Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, September 19, 2016

Needles Makes American Beacon's 2nd Deal Ever

Reported by Neil Anderson, Managing Editor

Gene Needles is making American Beacon's [profile] second acquisition ever.

Gene L. Needles Jr.
American Beacon Funds
Chairman, President, Chief Executive Officer
On September 12 Needles unveiled a deal to buy a controlling interest in Palm Beach, Florida-based Crest Investment Partners from Cypress Capital Group. Irving, Texas-based American Beacon is a private-equity-backed manager-of-managers with a mutual fund arm as well as institutional business, and Crest is a five-year-old quantitative, fundamental investing shop that both offers SMAs and powers the SmartALPHA Strategy Indexes.

Sam Hart, chief fiduciary officer of Cypress Trust Company, did not immediately return a call for comment on the deal.

The pricing and terms of the deal were not disclosed, though the parties expect to close the deal within 60 days. The deal comes two months after American Beacon bought a minority stake in an active ETF shop and three months after MFWire reported that Needles was poised to break into M&A with multiple acquisitions this year.

Colchester Partners and Skadden, Arps, Slate, Meagher & Flom advised American Beacon on the Crest deal. And Silver Lane Advisors introduced American Beacon to Crest.

Frank Kettle, managing director at Colchester, declined to comment on the deal. Liz Nesvold, managing partner at Silver Lane, was not available for comment.

Crest is led by Massimo Santicchia, co-founder and chief investment officer, and Katherine Gallagher, co-founder and senior PM. Santicchia is also the CIO for Cypress.

"Crest's disciplined, repeatable and transparent investment process aligns perfectly with our objective to combine undiscovered asset managers with our industry leading distribution capabilities," states Needles, who is chairman, president, and CEO of American Beacon. "Their investment strategies are highly complementary to our existing products and provide us with another growth opportunity for the firm."

In an interview with MFWire, Needles praises the Crest team as "easy to work with."

"We like the people," Needles says:

"In addition to liking fundamental asset management, we appreciate quantitative asset management. We've adopted and created a number of funds with various quantitative firms. We felt that Crest had a well-differentiated strategy ... that tends to be more concentrated and fit together more neatly in a cohesive strategy. You can take these products and essentially allocate around the economic cycle depending on where you think we are and where you think we're going.

Needles adds that Crest also has strong performance, with three of its four SMA strategies having five-star ratings from Morningstar and the fourth having a four-star rating.

Santicchia describes Crest as "one of the first independent investment subsidiaries to be included in American Beacon's growing multi-affiliate platform." He sees "tremendous opportunity to add value" and grow in the large cap equity space, especially.

"We needed more of an institutional-type distribution, with strong infrastructure and a national footprint," Santicchia tells MFWire. "American Beacon just meets all those criteria ... We really like them."

"We're really good at creating strategies," Santicchia adds. "We need a partner to create investable products," like mutual funds and ETFs, and then distribute them.

American Beacon had $51.7 billion in AUM as of June 30. As of Crest's latest form ADV, filed on March 16, the quant shop had $80.2 million in AUM. 

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