Nationwide Mutual Insurance Co. is angling for a position in the small but growing investment management market overseas with a deal to buy the British asset manager Gartmore Investment Management for $1.64 billion.
The deal, announced Thursday and expected to close in June, would nearly quadruple the assets under management at the Columbus, Ohio, insurer by bringing in some $86 billion.
"We've seen what happened in the United States. Now in Europe the same thing is happening," said Mark R. Thresher, a senior vice president at Nationwide Financial.
Some 64% of Gartmore's assets are managed for pension plans, which is a growing market abroad thanks to a push by foreign governments to privatize public pension programs.
But Nationwide is not abandoning plans to increase its assets in the United States, Mr. Thresher said, adding that the insurer views itself as a broad financial services company.
Nationwide, the nation's sixth-largest life insurer, manages $22 billion in the United States through its Villanova Capital unit and is looking to increase that organically to $50 billion within three to four years, he said. Nationwide tried to grow here through acquisition in the past: It unsuccessfully tried to acquire Pilgrim Baxter from United Asset Management last year.
Royal Bank of Scotland had been shopping London-based Gartmore around for several months. Gartmore was a unit of National Westminster Bank, which Royal Bank recently acquired. However, the Scottish bank had said from the outset that Gartmore did not fit into its strategy.
Gartmore is not unknown in the United States and has tried to crack the market several times, said Ben Phillips, a managing director with the Boston-based consulting firm Cerulli Associates.
In fact, as part of the deal with Nationwide, Gartmore would dissolve a five-year-old joint venture with the Charlotte, N.C., banking company Bank of America Corp. Gartmore would buy out Bank of America's stake in Gartmore Global Partners for an undisclosed sum, Gartmore said in a statement.
The deal would enable the in-house creation of annuities, with the asset manager providing the funds and the insurer providing the life insurance component, said James H. Overholt, a consultant with Milliman & Robertson of Chicago. "It's a wonder you haven't seen more deals between insurers and asset managers" he added.
Still, Mr. Phillips described Nationwide's plan to acquire Gartmore as "gutsy," noting that the insurer paid a premium for the company. The company has reportedly been offered as little as $900 million by other bidders, Mr. Phillips said. "However, it's a marquee name in Britain," he said.
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