Munder Capital Management, Comerica Inc.'s partner in the money management business, is looking to add more banks to its fold.
The company, in which Comerica holds an equity stake, wants to boost its total assets under management from $38 billion to $100 billion over the next three years, its executives say.
To reach that goal, Munder is looking to partner with a bank, insurance company, or brokerage firm, in an arrangement similar to the one it has with Comerica, said Paul D. Tobias, chief operating officer at Munder in Birmingham, Mich. Detroit-based Comerica has held a minority interest in the firm since 1995.
"Our goal is to structure our way out of the middle and be one of the top players 10 years from now," Mr. Tobias said.
Munder's search for additional partners underscores the growing belief among financial companies that they can't go it alone in the money management business.
KeyCorp and First Union Corp., for example, have recently agreed to sell one another's proprietary mutual funds. The two banks have also said they would offer Charles Schwab & Co.'s OneSource fund supermarket to provide more service to their customers.
Through its partnership with Munder, Comerica has found a way to embrace an investment management culture often at odds with commercial banking. And thanks to Comerica, Munder has picked up some $22 billion of assets under management.
"Now we want to find another one or two partners with distribution capabilities in the mutual fund area to help us accumulate assets," Mr. Tobias said.
Munder currently manages $5.2 billion in mutual funds, about 14% of its assets. Its growth call for funds to account for two-thirds of its assets under management, Mr. Tobias said.
The firm is looking to the burgeoning 401(k) retirement business to boost its mutual funds, he added, so it wants a partner with a strong presence in that business.
Munder is also considering teaming up with a money management boutique that would complement its highly regarded institutional and high-net-worth businesses. It would want to partner with a firm that would bring it clients and investment expertise in those areas, Mr. Tobias said.
Comerica, for its part, would welcome another bank or financial institution to its partnership with Munder, said George C. Eshelman, executive vice president of the bank's investment operations. The bank is eager to increase mutual fund assets, he said, and to emerge as a competitive player in that business.
"But it is important who that partner is and how we'd all work together," Mr. Eshelman said. "Many organizations in money management face the same dilemmas and are likely to see the world in the same manner we do."
To forge its deal with Munder, Comerica in 1995 spun off two of its investment advisory units, including its proprietary funds, to the firm in return for an undisclosed equity stake. Lee Munder, who founded the firm in 1985 with backing from Security Pacific Corp., is majority owner.
Mr. Munder has publicly said $100 billion is the magic number. Reaching that goal would place the company among the nation's top 25 asset managers, in the same league as T. Rowe Price, Baltimore, and Scudder, Stevens & Clark, Boston.
In addition to keeping costs down, size helps mutual fund managers find other firms to distribute its products, said Avi Nachmany, a partner at Strategic Insight, New York.
"Scale helps, but scale does not assure success," Mr. Nachmany added. Successful money managers will either have a niche investment strategy or a wide net of fund options, he explained.
Munder's lofty goal is similar to one set by First Union Corp.'s chief executive, Edward E. Crutchfield, in 1995. He said the Charlotte, N.C.- based bank, which then had $10 billion in mutual fund assets under management, was looking to manage $100 billion worth by 2000.
To build its assets, First Union has acquired four mutual fund complexes, including the $11 billion Keystone Funds last year. Its mutual fund assets under management just passed the $31 billion mark, and it manages another $30 billion in separate accounts and institutional assets.
Indeed, Mr. Tobias conceded that Munder, too, would have to make acquisitions to fuel its growth. But it plans to wait until the prices of asset management firms come down from their current highs.
As for reaching the $100 billion mark in the next three years, Mr. Tobias said the timetable is flexible. At a minimum, he said, the company should be halfway there in that time.
"If we can't hit $75 billion, we're not doing something right."