Wells and Nikko Selling Giant Asset Manager

SAN FRANCISCO - Wells Fargo & Co. and Nikko Securities are putting their jointly owned money management firm on the block.

Wells Fargo Nikko Investment Advisors, with $170 billion of assets under management, is one the world's largest money managers. But it isn't expanding fast enough to satisfy senior management, a spokeswoman said.

Wells Fargo Nikko is profitable, she said, but she declined to be specific.

The partnership was formed in 1990, when Nikko Securities, a leading Japanese brokerage firm, paid $125 million to buy half of Wells Fargo Investment Advisors, which at the time was a wholly owned unit of the California banking company.

Since then, Wells Fargo Nikko's assets have grown nearly 250%. With 600 employees and revenues that totaled $140 million last year, the company is expected to fetch between $255 million and $280 million, industry sources said.

State Street Boston Corp., which competes in the same sphere as Wells Fargo Nikko, is said to be a potential acquirer. A State Street spokeswoman said the banking company couldn't comment.

Other possible buyers were said to include Bankers Trust New York Corp., Mellon Bank Corp., and J.P. Morgan & Co.

Wells Fargo Nikko is a specialist in index funds, a cut-rate form of investing in which portfolios are composed of fixed baskets of securities that reflect a broad market index, such as the Standard & Poor's 500.

Consultants specializing in money management said that the portfolio management fees charged for index funds are less than half of the fees for portfolios that are actively managed.

As a result, "indexing is subject to fee pressure, and, to some extent, to commoditization pressure," said Paul David Schaffer, a partner in San Francisco with Consultancy Investment Counseling Inc.

Mr. Schaffer and other experts said that Wells Fargo Nikko could benefit by getting a new owner that has a broader range of investing styles, particularly in international portfolios. Ms. Kellogg noted that only $22 billion of Wells Fargo Nikko's assets are invested outside the United States.

Ms. Kellogg said it is not yet clear if Wells Fargo would insist on retaining some ownership of the money manager. She also said there was no timetable for a sale.

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