Who Will Buy Russell Investments?
The London Stock Exchange Group PLC, along with its advisor, are prepping the auction process for selling part of Seattle-based Russell Investments. By selectively shopping for nearly 100 buyers, possible acquirers could be a rival money manager, private equity firm, Canadian bank or an asset owner like a sovereign wealth fund? At the time of the London Stock Exchange acquisition of Russell, Russell Investments’ investment management unit posted an EBITDA of US$ 153 million – some are valuing that unit between US$ 1.2 billion to US$ 1.5 billion. Naysayers will critique Russell Investments lower-than-normal operating profit margins. In addition, change in ownership of an asset management firm always brings the risk of clients defecting. This could create a negative cascading effect on the valuation of the business.
Private equity firms may seem the likely buyer, as they can typically pay more and have pressures on spending committing capital from limited partners. Asset management firms with good cash flows and capable management, can also get financing easier than other financial institutions. Top contenders include San Francisco-based Genstar Capital which has Hal Strong on its advisory board. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
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