Continuing its expansion in asset management, First Union Corp. unveiled plans Tuesday to buy a Virginia firm with $5.5 billion in fixed- income accounts for institutional clients.
The Charlotte, N.C., banking company said it expects the deal for Tattersall Advisory Group of Richmond to close in the second quarter. Terms were not disclosed, but industry experts estimated the tab at $70 million to $100 million.
The acquisition would boost First Union's institutional assets under management to $65.5 billion, said David C. Francis, chief investment officer for First Capital Group, the banking company's institutional investment arm.
Tattersall would operate independently under First Capital and all its employees-35 people, including 13 investment professionals-would be retained, Mr. Francis said.
The deal is First Union's second in fixed-income business in eight months. Last summer the company bought Analytic-TSA International of London. Earlier, First Union bought two large investment management firms with an equity focus: Lieber & Co., manager of the Evergreen Funds, in 1994 and Keystone Investments in 1996.
Tattersall would bring First Union a "well-known fixed-income manager with a good client base" and let the banking company offer more products to institutional clients, Mr. Francis said.
Tattersall manages assets for "high-end corporations and pension plans," he said. Its focus is higher-quality fixed-income products, such as corporate and government bonds, including separate accounts and mutual funds. Its core bond product was a top-quartile performer for the five years through Dec. 31 and outperformed the Lehman Brothers aggregate index in 19 of the past 23 years, according to First Union.
Mr. Francis added that Tattersall would benefit by gaining access to First Union's research and distribution network.
Two-thirds of First Capital's assets are in fixed-income; the balance is in equities. The fixed-income assets are split between bonds and specialty offerings, such as enhanced money markets, Mr. Francis said. It employs 182 people.
The acquisition should allow First Union to expand in the pension market, said Geoffrey H. Bobroff, a mutual fund consultant in East Greenwich, R.I. Though Tattersall is an institutional manager, First Union could involve the company in retail asset management, he added.
Steven C. Pierson, vice president of Putnam, Lovell, de Guardiola & Thornton, an investment bank that focuses on asset managers, said Tattersall's founder, Fred T. Tattersall, is a well-regarded fund manager whose expertise could be leveraged for some of Evergreen's fixed-income portfolios.
Mr. Bobroff said First Union's buildup of its fixed-income business could be a savvy move if, as some have predicted, baby boomers become more conservative as they move toward retirement. That could trigger a shift from equity investing toward "quality" fixed-income, he said.