Comerica Inc. will expand its domestic asset management business, potentially through acquisitions, the head of its wealth management division said after the company sold its interest in a London asset manager.
"We will continue to reinvest in our business here in the United States with people and marketing to continue to fuel the growth that we have experienced," Dennis Mooradian, the executive vice president who heads the Detroit banking company's wealth and institutional management businesses, said in an interview Monday. "It is conceivable, someplace down the road, but not immediately, that we will look to make an acquisition."
Comerica and HSBC Holdings PLC announced Monday that they had sold Framlington Group Ltd., which was majority owned by Framlington Holdings Ltd., to the Paris insurance giant Axa SA. The deal was announced in July.
Munder Capital Management, Comerica's asset management arm, owned 49% of Framlington Holdings; HSBC owned the rest. Framlington Holdings sold its 90.8% interest in Framlington Group to Axa Investment Managers for about $350 million in cash. (Framlington Group employees own the rest of the unit.)
Comerica expects to post a net after-tax gain of about $32 million from the sale.
Mr. Mooradian, who is also the chairman and chief executive of Munder, said it had bought its stake in Framlington Holdings in October 1996.
"Our domestic business is actively managed by Munder, but we were only a minority owner in Framlington," he said. "We held a passive interest in Framlington. We want to have a greater focus on things that we have a direct control over."
Mr. Mooradian, whom Comerica hired from Wells Fargo & Co. two years ago to run its wealth management arm, said Munder has had strong domestic growth in the last seven to nine months. By June 30 its assets under management had grown 1.9% from the start of this year, and 12.6% from the start of last year, to $38.6 billion.
Retail investment product sales grew more significantly. Last year Munder made $615.5 million of retail share sales, 44.9% more than it made in 2003. In the first three quarters of this year it made $1.2 billion.
"Munder used to be a one- or two-trick pony," Mr. Mooradian said. "Now we have seen a broad range of strong results, and we want to capitalize on that."
Though it is too early to discuss the specifics of any potential acquisition, he said, Munder hopes to find ways to increase its asset base and fill in product gaps. It might look to add hedge funds to its product array, he said.
"You can see some industry trends are causing people to decide whether they want to be involved in manufacturing or distribution, and that may open us up to acquire," he said. "We think there will an increased activity in M&A, specifically when it comes to mutual funds."
Any purchase would be designed to enhance product depth, not distribution, Mr. Mooradian said.
Analysts said companies like Munder have posted stronger results in the past six months, because growth funds are returning to favor.
Some mutual fund families began advertising campaigns this week. On Monday, Fred Alger Management Inc., a growth fund manager with more than $9 billion of managed assets, started a print campaign to highlight its strong performance. And on Tuesday, John Hancock Financial Services Inc. began its first campaign since Manulife Financial Corp. bought it last year.
"Growth advertising is coming back into favor in the U.S., and fund companies are getting more and more confident about the prospects for expanding their assets," said Burton Greenwald, a Philadelphia analyst at BJ Greenwald Associates.
