Rabobank became the latest Dutch bank to grab a piece of the U.S. financial services market, announcing Friday a deal to buy Weiss Peck & Greer LLC, a New York investment management firm.
Terms of the deal were not disclosed. But sources said Rabobank would pay up to $575 million for Weiss Peck, which has $16 billion under management.
Robeco Group, Rabobank's investment management subsidiary, will make an initial $375 million cash payment for the firm, sources said. It will make additional payments of up to $200 million during the next five years, depending on whether Weiss Peck hits profitability targets.
"Our strategy calls for rapid expansion of our institutional asset management activities through the setup of an international network of asset managers," Robeco chief executive Pieter Korteweg said in a statement.
Weiss Peck has been looking for a buyer for at least a year, a source close to the deal said. Suitors included two other Dutch banks, ABN Amro Holding NV and ING Group NV, but discussions narrowed to Robeco at the end of last year when those banks pursued other acquisition targets, the source said.
ING recently bought Furman Selz Inc., a New York investment banking boutique, and Equitable of Iowa Cos., an insurance firm. ABN Amro has bid for several U.S. investment managers in recent months but has yet to complete a deal.
Robeco, based in Rotterdam, manages about $65 billion in securities and an additional $20 billion in property investments through various funds and asset management units, a spokesman said.
Though Weiss Peck will operate as an autonomous unit, Robeco will place controller Constant Korthout on Weiss Peck's executive committee, the company said. Robeco was advised by J.P. Morgan & Co.
Founded in 1970, Weiss Peck employs about 300 and has offices in Chicago and San Francisco. In addition to investment management, the firm participates in the private equity and venture capital markets.
The acquisition is not Robeco's first foray into U.S. asset management. Robeco took a 40% interest two years ago in Smith Graham & Co., Houston, a fixed-income firm with $2.3 billion under management.
That partnership works both ways, with Smith Graham advising Robeco on all of its U.S. bond investments and the Dutch firm providing strategies on global and international bond investments.
A senior portfolio manager from Robeco works in Houston alongside Smith Graham colleagues, said Gerald B. Smith, chairman and chief executive officer of Smith Graham. He said he is pleased with the partnership.
"They're good businesspeople; they know their markets very well and they respect our knowledge of the markets here," he said.