Rather than buy another fund family, UniCredito Italiano's Pioneer Global Asset Management SpA is buying an asset management and investment firm, Vanderbilt Capital Advisors, that specializes in separately managed fixed-income strategies and structured finance products.
Vanderbilt, of New York, is known for its collateralized debt obligation products, which securitize pools of debt assets such as loans or bonds. Interests in these pooled products are parsed and sold predominantly to institutional investors.
The employee-owned firm had been fiercely independent. It manages $13 billion, including $6.6 billion in collateralized debt obligation products that combine asset-backed securities, according to Standard & Poor's. That makes Vanderbilt the eighth-largest collateralized debt obligation manager over all and the fifth largest in terms of managing asset-backed securities.
Pioneer would not say how much it would pay for Vanderbilt, which would operate as a subsidiary of Pioneer Investment Management USA of Boston and retain its staff and four offices.
The purchase would strengthen Pioneer's institutional business, particularly in Europe and Asia, where demand for collateralized debt obligation products remains strong. Until now Pioneer's acquisitions have largely bolstered its retail asset management operations.
"This acquisition is part of our global plan to grow our institutional business," said Dario Frigerio, the chief executive officer at Pioneer Global. "As a rapidly expanding global asset management firm, it is important to have capabilities across a broad range of asset classes. We see opportunities for specialist collateralized debt obligation products and related capabilities throughout Europe."
"We are buying Vanderbilt in part for its potential to reach global markets," a spokesman said. "There is a demand in the U.S., Europe, and Asia for structured funds."
Roger Hartley, a managing director in the San Francisco office of Putnam Lovell, said the deal would give Vanderbilt access to a global platform and the ability to broaden its offerings. Vanderbilt operates only in the United States; Pioneer is in 18 countries.
"U.S. collateralized debt obligation issuance was $160 billion last year, according to Moody's, a 72% increase from 2004," Mr. Hartley said. "This is an area in which institutional investors are keenly interested."
That interest is likely to prompt more traditional asset managers to consider buying players in collateralized debt obligations, Mr. Hartley said. "There is an increasing interest in the structured fixed-income area, and you should expect more deals like this," he said.
Eric Fitzwater, a senior analyst with the financial institutions group at SNL Financial in Charlottesville, Va., agreed. "I think we will continue to see other deals like this," he said. This trend is similar to the recent one of traditional asset management firms buying hedge funds to bolster their capabilities with nontraditional investment products, Mr. Fitzwater said.
The Vanderbilt deal is a departure for Pioneer, which has bought a number of mutual fund companies - most recently the AmSouth Funds family, which included 23 funds with $5.1 billion of assets, in September.
AmSouth Bancorp., of Birmingham, Ala., decided to quit the mutual fund business, and Pioneer was chosen from a short list of suitors. Pioneer has since merged 16 of the AmSouth funds into Pioneer funds and created seven new funds to accommodate the others.
Other recent developments include:
The February purchase of a large-cap fund managed by Cullen Capital Management.
The hiring in January of Kevin Rowell, a former head of Safeco's mutual funds, as the head of distribution for retail funds at Pioneer Investment Management USA and an executive vice president.
UniCredito's purchase last October of Bayerische Hypo-und Vereinsbank of Germany, whose asset management divisions boosted Pioneer's worldwide assets to over $300 billion.
The purchase in February 2005 of two equity growth funds managed by Oak Ridge Investments and four such funds managed by L. Roy Papp & Associates.
The December 2004 acquisition of 22 equity and fixed-income funds formerly managed by Safeco, which quit the fund business to focus on insurance.
This article and the accompanying chart appeared in Money Mangement Executive, a SourceMedia publication. Ms. Pizzani is a freelance writer in Brewster, N.Y.
