2011 | Investment Management Industry Review About Berkshire Capital Berkshire Capital is a leading investment bank focused on M&A in the and securities industries. With more completed transactions in this space than any other investment bank, we help clients find successful, long lasting partnerships.

Founded in 1983, Berkshire Capital is an employee-controlled investment bank headquartered in with offices in Denver and . We are recognized as a leading expert in the wealth management, money management, alternatives, real estate and broker/ dealer industries. We believe our success as a firm is determined by the success of our clients and the durability of the partnership we help them to structure.

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Berkshire Capital Securities Ltd. is authorized and regulated by the FSA www.berkcap.com Citigroup the U.S.Principal number Global eclipsing Investors $1 trillion in early December. A report done by London’s Create-Research for and suggests that index Time was when the “early bird” special was the funds could add 10 share points by the end of this decade soleMore purview changes of senior citizens, on the with menu a particularly to account for 25% of total global assets, although the loyal following in Florida. The financial crisis has firm allows that as the indices grow larger, creeping “inefficiencies” could set the stage for active managers to changed all that: the New York Times reported “strike back.” early last year that hard-pressed, middle- Fixed income mutual funds, which registered a record aged patrons and even 20-somethings are now $376 billion in netPimco’s inflows Total in the Return U.S. in Fund2009, enjoyed capitalizing on the bargain dining period in the inflows of $243 billion in the first nine months of 2010, Sunshine State. according to ICI. continued to bolster its dominant position among mutual funds,

As the financial crisis lingers, those diners aren’t the only unlikely converts to the “earlyBC bird” Partners circuit. In September, for example, the reported that GDP Growth (Decline) 2009 2010* 2011* international firm offered a 5% AdvancedAsia Leads Economies 2.2% “early bird” discount on fees for investors who made an initial commitment to the firm’s new $7.8 billion U.S. (3.2%) 2.7% 2.3 fund, scheduled to close this year. While the sums of money Euro Area 1.5 involved eclipse the 5 o’clock dinner special, the strategy is (2.6) 2.6 similar: prying money from frugal customers. U.K. (4.1) 1.7 2.0 Like many businesses and individuals, the private equity Japan (4.9) 1.7 1.5 industry — which in 2006 accounted for 18% of global Developing Asia (5.2) 2.8 8.4 merger-and-acquisition activity by value ($740 billion) — is facing tougher times. Analysts, poring over the data, China 6.9 9.4 9.6 have begun to question whether the industry as a whole India 9.1 10.5 8.4 delivers strong enough returns to justify its premium fee Global 4.2 structure, and investors themselves have reined in their 5.7 9.7 commitments. In the first three quarters of 2010, the (0.6) 4.8 industry raised $172 billion, down 25% from 2009 and World Trade about one-third the level in 2008, according to Preqin. The Volume (goods & svcs.) +7.0 amount of time it takes to close funds is also on the rise, and, at nearly 20 months last year, was twice the time of * Projected (11.0%) +11.4% 2004. Source: IMF, October 2010 The diminished fortunes of the private equity industry mirrored a larger and generally cautious investment picture as the world emerged from Calendar Year Four since the start of the financial crisis in the summer and fall as assets jumped 27% in the first 10 months of 2010 to of 2007. For most of the year, investors continued to shy $256 billion — double the level just two years earlier. In away from equities, which in the U.S. recorded negative the third quarter, investors parked more new money with flows in the first three quarters of 2010 according to the Pimco ($56 billion) than with any other asset manager. Investment Company Institute (ICI). Equity funds did boost (In December, Pimco changed the Total Return Fund’s their share of the mutual fund market to 46% ($5.2 trillion mandate to allow for investing up to 10% of assets in in assets) in the first three quarters from 39% two years preferred stock and convertible securities.) earlier, but that level was still below the 50% to 60% range In the frantic search for yield, investors were also that prevailed between 1997 and 2007 (with the exception betting on riskier instruments, in the first three quarters of 2002). pumping $172 billion into new junk bond issues in the Moreover, when investors do opt for stock funds, they are U.S. — a number that surpassed the previous annual increasingly choosing economical index-based products, record, according to Thomson Reuters. As demand rose including exchange traded funds (ETFs). Driven by net and investors comforted themselves with the sharp drop inflows, ETF assets rose 13% in both theBlackRock U.S. and Europe in defaults, previously beaten-down junk bond prices in the first three quarters of 2010, to $797 billion and reached elevated levels last seen prior to the financial $256 billion, respectively, according to , with crash. Global junk bondBERKSHIRE issuance CAPITAL during SECURITIES the same period LLC | 1

— at $209 billion,Deutsche nearly double Bank the year-earlier level after the government wound down a 2-year-old Troubled — also set a new annual record. In an interview with Asset Relief Program (TARP) that is expected to ultimately Bloomberg, one fixed income manager cost taxpayers anywhere from $50 billion to $100 billion provided a succinct view: “Junk bonds have benefited — far less than originally feared. In December, the U.S. greatly by the fact that they’re the only place in the fixed Treasury also sold the remainder of its stake in the now- income world you can get some nice return.” profitable Citigroup, a bailout that ended up generating a Emerging markets, which have registered solid economic $12 billion profit for Uncle Sam. growth in the face of the developed world’s woes, also drew investors, with EPFR Global data showing record bond fund net inflows in the first nine months of $39 billion and equity fund flows at a record $84 billion through the first three weeks of November. Goldman 2009 2010 Sachs in a recent study estimates that institutional investors in developed markets could purchase GlobalTaking High-Yield a Chance Debt Offerings on Debt $4 trillion in emerging market equities through 2030, Average Spread with those nations potentially raising their share of global $177bn $318bn (+80%) market capitalization to 55% from the current 31%. Source: Thomson Reuters 608 bps 148 bps Not coincidentally, selected emerging markets in Asia and Latin America offered some of the best equity returns last year. As corporate profits surged, U.S. markets also generated positive numbers, the flow of money and uncertainty among investors notwithstanding. As of the Going forward, however, analysts raise questions about third quarter, Thomson Reuters estimated that full-year the impact on bank profitability of new regulations, with 2010 profits at Standard & Poor’s 500 companies would Standard & Poor’s suggesting in a very early and broad rise a collective 36% while projecting 14% growth in review that the eight largest banks in the U.S. could take 2011. reported in December that a collective annual hit to profits in the area of $20 billion, nonfinancial companies were sitting on $1.93 trillion in based on a loss of proprietary trading income, reduced cash and other liquid assets, with cash accounting for 7.4% derivatives trading income, and lower debit card fees. of total assets, a ratio last seen in 1959. S&P did acknowledge that its findings were “subject to significant uncertainties” based upon the final rules and implementation while also expressing confidence that IN TOTAL, THERE WERE 143 DEALS VALUED AT banks could generate greater profits in other areas to offset the losses. MORE THAN $21 BILLION, INCLUDING THREE Within the asset management industry, buyers evidenced both increased confidence and opportunism in 2010, as BILLION-DOLLAR-PLUS TRANSACTIONS stock markets, though erratic, provided positive returns; assets and profits rose; and regulatory changes and the accumulated pressures of several years of depressed markets drove sales. Banks continued to reorganize operations in response to financial challenges and regulations, selling several asset managers, including The stabilization of the U.S. banking industry was another alternatives businesses. The challenges of economics and positive development in 2010, with financial firms in the scale or succession issues continued to motivate boutiques S&P 500 expected to record 144% growth in profits for the to sell, though many held on to equity in line with recent full year and another 25% in 2011, according to Thomson trends and best practices. Reuters. Between the third quarters of 2009 and 2010, In total, there were 143 deals valued at more than commercial and savings banks in the U.S. insured by the $21 billion in aggregate, including three billion-dollar- Federal Deposit Corporation (FDIC) saw profits plus transactions, with two of the buyers being Canadian climb sevenfold to $14.5 billion, driven in large part by banks. Unlike their larger brethren across the border a reduction in provisions for loan losses that accrued to and in Europe, Canada’s banks avoided the subprime the bottom line. The third quarter results marked the debacle, and emerged with solid balance sheets and an fifth consecutive quarter the industry recorded gains in eye on expansion.Scotiabank The largest deal involving a Canadian profitability. bank — and the largestDundeeWealth in 2010 — was a strictly domestic The improved picture led the Federal Reserve in November affair that saw pay $2.3 billion for the 82% of to give the green light to banks to boost dividends again, mutual fund manager it did not own. The addition made Scotiabank the fifth-largest mutual fund albeit| INVESTMENT within the context MANAGEMENT of new and INDUSTRY more restrictiveREVIEW ~ 2011 capital requirements. That edict occurred just a month manager in the country and furthered the consolidation 2 Commerzbank trend in theBNP nation’s Paribas asset management industry. next two years. Scotiabank also cut two deals for wealth managers, Royal Bank of Canada BailoutDresdner recipient Bank Monaco continued to divest its including ’ Panamanian-based business. wealth business outside Germany, adding oneBNY more Mellon, sale BlueBayIn the second Asset mega-deal, Management extended Focus(of Financial Partners ) toNorthern the six it Trustexecuted in 2009. its footprint with the $1.5 billion acquisition of London’s Although it did draw such notable buyers as , which manages $40 billion and , the wealth Forestersin a mix of traditionalSprott Inc.and alternative assets in Europe and sector was otherwise quiet for a second consecutive year. emerging markets. Two other Canadian firms, CI Financial and , made acquisitions in theHartford U.S., while Financial Toronto-based Services mutual Group fund giant scooped up the CanadianAGF Management fund business of . In a deal Major Stock Indices 2010 v. 2009 Close Recent Low between two Toronto firms, Acuity Back from the Lows(%) 12/31/10 (Mo./Yr.) paid $320 million (with about one-third Investment Management Dow Jones Ind. Avg. subject to deferral over three years) for (AUM: $7 billion), one S&P 500 11.0% 11,578 6,547 (3/09) of Canada’s few remaining independent mid-size Nasdaq fund managers. 12.8 1,258 677 (3/09) Royal Bank FTSE 100 (U.K.) Elsewhere,of Scotland banksBank damaged of Ireland by the financial 16.9 2,653 1,269 (3/09) crisis remained sellers, Aberdeenincluding Asset DAX (Germany) 9.0 5,900 3,512 (3/09) and , which Management State Street Global Advisors Nikkei 225 16.1 6,914 3,665 (3/09) sold asset managers to and , China (Shanghai “A”) (3.0) 10,229 7,055 (3/09) respectively. Several major banks shopped their (14.3) 2,808 1,707 (11/08) alternatives businesses last year, to comply with Dow Jones U.S. Industry Index % gain 2010 v. 2009 regulatory changes and/or as part of strategic reorganizations. A number of these deals involved Financials HSBC.management Bank of , America includingCitigroup the firstMorgan of Asset Managers 12.0% five private equity unit divestitures planned by Stanley Banks , and 8.1 also sold alternative asset managers, Life Insurance 10.6 while Bank of America soldMerrill more Lynch than &$8 Co. billion Investment Services 23.0 Deutschein BlackRock Bank shares — a stake it inherited with the 2009 acquisition of QS Investors 1.6 divested its large New York- based quantitative manager, , but did Craigsmake two Investment investments, Partners includingSunTrust the purchase Banks ofUnicredit a 49% stake in New Zealand broker and asset manager Meanwhile, McKinsey & Co.’s latest annual survey of . and European private banking showed the continuing pressure were among other banks reviewing the sale of the sector faces, with profitability declining again in 2009 M&T asset management units. to 20 basis points of AUM — about half the level of 2005 Bank Corp. Wilmington Trust — even as AUM increased by 10%. One of the higher-profile distress deals involved ’s acquisition of . Although As the credit markets began to gain some footing,Blackstone several Buffalo-based M&T took on a balance sheet laden with Grouplarge alternative asset managers took the opportunity bad construction loans, it paid a knockdown price of to expand their capabilitiesGSO Capital via acquisitions. Partners followed up on its major 2008 purchase of $351 million in stockBank and ofgained Montreal the Delaware bank’s prestigious wealth and asset management businesses credit asset manager to buy the collateral management agreements for collateralized debt (AUM: $58 billion). Marshall added & Isley to its Midwest Callidus Capital Management banking and wealth operations with the $4.1 billion Fortressobligations Investment (CDOs) and Group collateralized loan obligations acquisition of Wisconsin-based , also (CLOs) managed by Carlyle Group. troubled by loan losses. M&I has $33 billion in AUM and acquired two businesses another $129 billion in assets under administration (AUA) with a total of $13 billion in CDO assets. , a particularly aggressive dealmaker last year in a in a wealth business that accounts for 12% ofHarris revenue. Bank Stanfield Capital Bank of Montreal, with some $260 billion in AUM and AUA Partnersrange of industries, bought the collateral management in its private client business, owns Chicago’s , contracts for 11 CLO funds managed by which also has a significant wealth unit. Analysts expect . Carlyle which is reviewing a public offering, also numerous takeovers of struggling regional banks over the acquired a 55% stake BERKSHIREin a long-short CAPITAL credit SECURITIES , LLC | 3 Claren Road

(AUM: $4.5 billion). Institutional investors The world economy and the markets made it through one appeared to show an increasing interest in credit hedge more year of crisis with a collective balance sheet that fund strategies last year as part of an effort to diversify appears precariously balanced between recovery and alternative assets away from equities. Man Group chaos, in part because the long-term cost of maintaining TheGLG hedge Partners fund industry accounted for the third mega- that uneasy equilibrium continues to mushroom. In the deal of 2010, as paid $1.6 billion for . In an increasingly stratified hedge fund universe, the deal created a top-two industry leader with more than $50 billion in dedicated hedge fund AUM. The transaction also teams two publicly-traded and complementary Emerging Markets Surge firms that have seen their performances drop off Value of Announced Deals ($ billions) 2010 2010 v. 2009 considerably since start of the financialCredit crisis. Suisse In Mergers & Acquisitions, All Industries (%) Group,a busy year Gottex for Funddealmakers, Management, the alternative JPMorgan sector Chase,drew such Natixis, cross Sciens border Capital buyers Management as Worldwide $2,434 +23% TPG-Axon U.S $882 +14 Affiliated Managers Group and . In the largest of three deals it made Europe $641 +10 last year, Pantheon Ventures paid $775 Asia-Pacific $482 +49 million for 85% of London private equity manager , a top-three Emerging Markets $806 +76 fund of funds manager in that industry. 2010 M&A (misc) ReligareIn what is Enterprises likely a harbinger of deals to come featuring buyers from emerging markets, India’s invested inNorthgate two U.S.-based Finance Source: Thomson sector %Reuters of target value = 15% Capitalalternative asset managers, paying $200 million for a majority of San Francisco’s , a privateLandmark equity fund Partners of funds firm with $3 billion in AUM, and $172 million for 55% of Connecticut’s , a private equity and real estate fund of funds manager with more than $8 billion in committed capital. Religare plans to create a separately traded U.S.-based global asset management business 2006 2007 2008 2009 2010 built mainly around boutiques.BTG Within MajorityInvestment Equity Management Transactions 115 emerging markets, Brazilian investment Pactual Minority Equity 15 bank and wealth manager 150 166 149 115 received a $1.8 billion capital 12 26 29 5 13 infusion from aAbu consortium Dhabi Investment of three Total 1675 20412 19921 13515 143 CouncilpowerfulChina emerging Investment markets Corp.sovereign wealthGovernment funds: of Singapore Investment Total Transaction Value ($B) $21.2 Corp. , , and Total AUM Changing Hands ($B) $47.2 $37.4 $16.3 $31.7 $1,134 Source: Berkshire Capital Securities LLC $2,340 $1,155 $1,148 $3,300 The real estate advisoryRockefeller sector drew Group Internationala number of opportunistic investors last year, including Europa, which Capital enteredGuardian Europe Life Insurance via an investmentLowe in real Enterprises estate fund manager . took a U.S., the deal cemented in December between President minority stake in ’ real estate advisory Barack Obama and Congress to extend Bush-era tax cuts unit, calling it an “opportune time to invest in real estate.” and unemployment insurance could mean a 2011 deficit In Europe, managementKBC Asset in two Management advisory firms bought exceeding the $1.3 trillion level reached in 2010. The out the “non-core” interestsv ofv twov large financial firms, deficit forecast for 2012 also remains above the Lynch and . $1 trillion level. | INVESTMENT MANAGEMENT INDUSTRY REVIEW ~ 2011

4 Europe remained in its own controlled but perpetual As was the case with the dot-com and real estate bubbles state of crisis, with the bailout of Greece beginning in May, — and among bailout recipients such as General Motors Ireland following six months later, and officials keeping a that began to resemble unsustainable social service nervous eye on Portugal and the first nation of significant agencies as much as they did industrial corporations — at size, Spain. For Greece, the eurozone and International some point financial reality sinks in. When it does, federal, Monetary Fund ponied up a rescue package of $150 billion, adding a just-in- case total of several hundred billion more for the entire area to calm the waters. Ireland received promises of $110 billion. Meanwhile, the Germans’ austere response to salvaging its profligate euro- Who’sNumber Selling of Transactions by Sector as % of Total cousins had some observers mumbling about the sustainability and wisdom of the currency union as currently constituted. 4% 13% 22% Many analysts are concerned that the 38% bailout packages may ultimately prove 48% 13% insufficient, in part because the demand 35% among skeptical private investors for 27% higher bond rates in those markets. The added austerity required to pay 2009 2010 investors will further compromise their economies. Indeed, Pimco’s head Value of Transactions by Sector as % of Total of European portfolio management, 4% Andrew Bosomworth, suggested during 1% an interview with German newspaper Die Welt in December that Greece, Ireland 16% 24% 24% and Portugal will needBarclays to leave Capital the eurozone temporarily to restructure their 5% debts. Although a global 79% survey of 2,000 institutional investors 47% showed confidence in the ability of the euro area to avoid a “full-fledged crisis,” one in three still expects a eurozone 2009 2010 country to either default or restructure Financialdebt in 2011 Times and another 60% expect Money Management Real Estate additional European bailouts. The Wealth Management Private Equity / Other wondered aloud whether Source: Berkshire Capital Securities LLC the European Union’s failure from the start to address “monetary union with fiscal union” undermines Europe’s pledge “to do ‘whatever is required’ to combat the eurozone crisis.” Under ordinary circumstances, the crisis- related debt might be managed over time through a mix of restrained austerity and accelerated economic growth. But with tens of millions of state and local governments will have to make tough baby boomers preparing for retirement in those nations decisions on taxes and spending that will likely depress and expecting their just reward from the state, these consumers and businesses alike. The reaction from an same governments already face costs that appeared American citizenry that tends to appreciate entitlements untenable prior to the financial crisis. In the U.S., the and services but rejects the taxes required to pay for them national fiscal nightmare is complicated by the apparently may also turn ugly, with all that portends in the political unsustainable health care and pension promises made to arena. public employees on the state and local levels. Estimates of unfunded retirement liabilities range as high as $3 trillion In November, a White House panel kicked off the for states and $600 billion for the largest U.S. cities. reality check by recommendingBERKSHIRE CAPITAL $3.8 trillion SECURITIES in federal LLC | 5

cuts by 2020, including the elimination of deductions generation and principal protection.” McKinsey figures on mortgages above $500,000. The politically dicey insurance companies, “with their large balance sheets question of raising the retirement age for Social Security and risk management expertise,” could emerge as a major was managed by allowing for a decades-long transition beneficiary. culminating in the age of 69 by 2075. The plan was For dealmakers focused on superior growth and promptly attacked from both the left and the right over profitability, that will make boutique firms with entitlements and taxes. But Erskine Bowles, panel co- specialized niches and/or superior track records of chairman and former chief of staff to President Bill Clinton, particular interest for partial or full ownership. It will emphasized to the Wall Street Journal that political action also drive many American asset managers in search of

FOR DEALMAKERS FOCUSED ON SUPERIOR GROWTH 2006 2007 2008 2009 2010 AND PROFITABILITY, THAT MoneyWho’s Management Buying 37 WILL MAKE BOUTIQUE Financial 31 30 48 34 22 Wealth Manager 18 22 28 16 19 FIRMS WITH SPECIALIZED Securities Firm 24 38 29 23 17 NICHES AND/OR SUPERIOR MBO 14 16 4 11 13 Bank 11 TRACK RECORDS OF 5 12 21 15 Real Estate Manager 39 43 34 14 6 PARTICULAR INTEREST. Trust Company 6 14 2 5 5 Insurance Company 6 4 7 8 5 Other 13 7 7 2 8 Total 16711 20418 19919 1357 143 Source: Berkshire Capital Securities LLC is required. “I guarantee if they don’t do it now, five years from now when we look back and the crisis is upon us... people will think, ‘How could we have been so foolish?’” Coming out of a financial crisis that shook confidence in traditional assumptions about long- new markets, including Asia and Latin America. Affiliated term investing and the ability of active managers to divine Managers Group, something of a proxy for the sentiments the future, the asset management industry faces its own of dealmakers, made Partners three investments last year that all set of challenges. In the near term at least, margins are worked to expand its international exposure. JPMorgan likely to remain under pressure as investors apply a Chase and both invested in Brazilian greater percentage of their assets to passive investments. asset managers. But the size, wealth and openness of the Demographics also threaten to work against profitability, American market make it equally attractive for well-heeled as aging baby boomers maintain the recent crisis-driven financial firms from emerging markets, as was evidenced tilt toward more conservative investments. by the two U.S. investments made by India’s ambitious According to McKinsey’s 2010 asset management survey, Religare Enterprises. 64% of investible assets in the U.S. are now controlled by A financial crisis that has already accelerated a shift in households falling into the age 55-and-up demographic, relative power between the industrialized world and the a number the consulting firm projects will reach 71% emerging markets of Asia, Latin America and Europe is by 2020. This sea change will force asset managers therefore likely to accelerate the globalization of the asset to shift from a business model “still firmly rooted in management industry, with emerging players becoming accumulation mode” to one that focuses on “income more assertive as buyers and strategic partners.

6 | INVESTMENT MANAGEMENT INDUSTRY REVIEW ~ 2011

showed that 25% of European institutional respondents plan to directly manage a larger share of their own assets. The changes in the marketplace, including a decided As institutional investors endured the fourth preference among retail investors for more conservative calendarMoney year Management since the start of the financial crisis and passive equity investments, were reflected in many of in the summer of 2007, and cringing headlines the money management deals last year, as buyers showed a marked interest in adding fixed income capabilities. But reported the yawning gaps in public employee asset managers who counted credit-related instruments pension funds, there were clear signs of restiveness. in their product portfolios also took the opportunity Although public pension plans reported strong to bolster those capabilities via acquisitions. Broadly, returns for the 2009 year, the continued actuarial dealmakers in the money management sector were pressure on the plans — not to mention the reasonably active last year, recordingBlackstone 54 transactionsGroup, Carlyle public purse — led some to squeeze their money Group,valued atFortress $5.1 billion. Investment Buyers Groupincluded suchGuggenheim heavyweights as managers on fees, which generally account for the Partners Charles Schwab Federated Investorsand single greatest expense. The largest such plan, the , along with traditional asset managers like California Public Employees’ Retirement System and . Logan Circle Partners (Calpers), reported it had saved $100 million in The acquisition by Fortress Investment Group of fixed the fiscal year ending June 2010 as a result of income institutional manager renegotiated fees. was a clear sign of changing times, as alternative asset managers extend their businesses into traditional arenas. Private equity firms in particular are grappling with a California State Teachers’ Retirement System more challenging fund-raising environment, as institutions Meanwhile, the state’s second massive , express greater skepticism about the value of many of the these investments. Logan Circle added $12 billion in fixed (Calstrs), is attempting to save by managing more of its income investments to the $30 billion Fortress has in money in-house, a strategy many other public funds are private equity and hedge funds. Fortress paid $21 million exploring as well. NumerousEmployees’ institutions are also shifting in cash and could make additional performance-based Retirementtheir equity allocationsSystem of Rhode toward Island less expensive passive payments this year. investment products. The , with more than $7 billion in assets, may be the most extreme example, having parked virtually its entire 2006 2007 2008 2009 2010 $4 billion global equity portfolio in Money Management Transactions index funds, according to its April Number of Transactions 54 2010 report. U.S. institutions are also Combined Value ($B) 49 62 77 65 $5.1 dabbling in exchange traded funds, Total Seller AUM ($B) $357 with Greenwich Associates estimating $34.7 $15.1 $8.7 $25.1 that 14% of institutions are currently Average Deal Size ($M) $1,920 $718 $683 $3,011 $95 using these instruments, primarily for Average Seller AUM ($B) $6.6 “tactical” reasons related to portfolio $708 $244 $113 $386 management. Source: Berkshire Capital Securities $39.2 LLC $11.6 $8.9 $46.3 The trend away from more profitable active equity investing isn’t confined to the U.S. In the most recent FTfm survey of U.K. pension funds,Legal the & two General Investment Managementleading managers rankedBlackRock by AUM were passive investment firms, and , with AUM up by strong A three-year-old joint ventureDelaware between Investments employees double-digits at both firms in 2009. “We used to ask is and Guggenheim Partners, Logan was formed via there going to be a point where people start moving Guggenheim’s lift-out from of a money back into active,” researcher Stephen Birch told the team of fixed income managers, traders and marketers, Financial Times. “But it doesn’t look likely.” A survey by along with $13 billion in AUM. In referencing the deal Feri Euro Rating Services indicated that among German in its latest annual report, Fortress said expanding its investment offerings and “adding scalable platforms institutions, European equity mandates made up half of BERKSHIRE CAPITAL SECURITIES LLC | 7 the stated mandate cancellations. The Feri survey also outside the alternative space will bring a new group of investors to Fortress while diversifying earnings.” amid a generally risk-averse marketplace, investors did Logan will retain Americanits name and International continue to Groupoperate in begin wagering money again in the quest for yield. Global Philadelphia.American GeneralIn a separate Finance diversification move, Fortress junk bond issuance doubled in the first three quarters acquired 80% of ’s interest of 2010 versus 2009, to reach an annual record of $209 in , which provides loans, retail billion. The spread between junk and investment grade financing and other credit products (see to consumers. next column) Fortress bonds also narrowed substantially from the height of the made three other acquisitions that added a total of financial crisis, while prices on U.S. junk bonds topped 100 $22 billion in credit-related assets . UMB Financial Corp on average last September — an indicator of demand as In a transaction between two Midwest firms, Kansas City- well as confidence about repayment. And, indeed, Moody’s based . acquired nearly $10 billion in Investors Service reported that the junk bond default rate fixed income AUMReams through Asset the was expected to dip below 3% by the end of 2010, nearly Managementpurchase of “substantially Co all” 12 points below the level reached of Indiana-based UMB FINANCIAL CORP. ACQUIRED in the fourth quarter of 2009. ., an institutional The leveraged loan market also firm established in 1981.Scout The NEARLY $10 BILLION IN FIXED rebounded from a 2008 low, with Investmentdeal was done Advisors through UMB’s prices recovering in tandem, while asset management arm, INCOME AUM THROUGH THE the associated collateralized loan , which has obligation (CLOs) market beganRoyal an equity focus. In explaining PURCHASE OF “SUBSTANTIALLY Bankshowing of Scotlandsigns of life. Meanwhile, in the deal, UMB president and the U.K., government-owned chief operating officer Peter ALL” OF INDIANA-BASED REAMS embarked on a deSilva described fixed income road show last September to hawk investments as “a key strategic ASSET MANAGEMENT CO. the sale of more than $7 billion in growth area in the institutional mortgage-backed securities — the asset management business” largest such offering since the while Reams alluded to “recent Investecfinancial meltdown. At the same global economic conditions” time, South African-based bank driving institutions to seek brought to European “service providers that have a strong parent like UMB.” investors nearly $400 million in mortgage-backed In the five years through 2009, AUM at UMB rose 68% to securities that included subprime loans, the first such $12.4 billion. As part of an effort to expand its mutual fund security in Europe since the credit crisis began. and institutional businesses, in 2009 UMB created Scout Congress Asset Management Fortress Investment cut three credit-relatedCW Financial asset Services Distributors to market Scout funds. management deals in addition to its purchase of Logan Prelude Asset Managementof Boston enhanced its fixed Partners, including the purchase of , income offerings through the acquisition of a neighboring one of the largest special servicers for commercial and asset manager, . Prelude multifamily real estate debt, with a portfolio that includes adds $1.2 billion in fixed income institutional AUM to the more than $12 billion in AUM. Fortress said its “global $5.2 billion in equity and fixed income assets Congress capabilities in real estate, credit and structured finance” already managed. Congress, an institutional and wealth combined with CW’s diverse capabilities “result in a management firm founded in 1985, said the merger “is unique capacity to participate in, andOtera benefit Capital from, the intended to provide an expanded fixed income team with real estate market’s recovery and reconstitution.”Caisse de depot Boston- et additional portfolio management and research depth.” basedplacement CW was du majority-ownedQuebec by , a unit Federated Investors addedRidgeWorth to its massive Capital money Investments market of Canadian pension fund manager offerings through the acquisition of $17 billion in such . SunTrust Banks GSO Capital Partners instruments from , which two years ago acquired a major unit of . The assets were wrapped into credit asset manager, Callidus Capital Management, purchased existing Federated money market funds with similar the collateralAllied management Capital Corp agreements for CDO and Putnaminvestment Investments objectives. In 2008, Federated picked up more CLO funds managed Aresby Capital , than $12 billion in distressed money market assets from a unit of . (itself acquired last year . Federated, whose money market- by finance company ). The Callidus funds, driven business benefitted from massive inflows during amounting to $3.2 billion in AUM and primarily consisting the financial crisis, saw a reversal of that trend between of leveraged loans and high-yield bonds, will be managed the second quarters of 2009 and 2010, with money market within the GSO Capital unit and enhanced Blackstone’s AUM declining $86 billion and overall AUM off $65 billion. position as one the largest managers of credit-related Two years after the collapse of Lehman Brothers and the assets. GSO had $24 billion in AUM prior to the deal. “This financial meltdown, several asset managers sifted through transaction represents the execution of one of our key 8the| ruins INVESTMENT to enhance MANAGEMENT their credit-related INDUSTRY offerings. REVIEW Indeed, ~ 2011 strategic initiatives to further scale our CLO franchise and capitalize on the strength of our investment process and Boston and founded in 1994, Windward has generated infrastructure,” said Bennett Goodman, senior managing 56% compound annual growth in AUM over the last partner of GSO. five years, with assets managed in conservative, growth Carlyle Group was the third major alternative asset and aggressive-growth portfolios of ETFs. Woodward’s manager to scoop upStanfield credit-related Capital assets Partners last year, traditional client list of high net worth individuals and acquiring the collateral management contracts for 11 CLO institutions will be expanded to incorporate Schwab’s funds managed by , as well retail customers. as the investment management agreements for three of Guggenheim Partners picked up Securitymore than Benefit $5 billion Corp Stanfield’s separate accounts. The deal adds $5.1 billion in ETF assets as well as retirement products and in credit-related AUM to the $13 billion Carlyle already mutual funds via its purchase of . managed. Calling scale “critical to Guggenheim, which will invest the CLO business,” Carlyle noted $400 million in Security Benefit that the addition of Stanfield’s THE EXCHANGED TRADED FUNDS as part of the deal, was joined assets makes it one of the world’s by investors who included largest structured credit managers ARENA GENERATED SEVERAL Guggenheim shareholders. and “an industry consolidator.” Guggenheim managing partner Stanfield CEO Dan Baldwin called DEALS, THE MOST SIGNIFICANT Todd Boehly said the transaction its decision to sell “a very difficult will allow his company to one” but noted that investors in a INVOLVING CHARLES SCHWAB’S “accelerate Security Benefit’s “consolidating” credit marketplace growth given the marketplace’s are seeking “firms that possess the $150 MILLION STOCK-AND-CASH increasing demand for robust broad array of resources found at Commercial Industrial Finance retirement programs and large global asset managers.” Corp PURCHASE OF WINDWARD investment strategies.” Kansas- based Security Benefit gained the CypressTree. added scale Investment to its portfolio INVESTMENT MANAGEMENT. ETFs and alternative products Managementof CLOs with the purchase via its 2007 acquisition of Rydex of Investments, which has a total , which manages or of $20 billion in AUM. In 2009, subadvises $2.8 billion in high- Guggenheim alsoClaymore added someGroup $3 billion in ETF assets through its yield and leveraged loan assets. PrimusCIFC had Guaranty $3.6 billion in CLO assets prior to the deal. acquisition of . CypressTree was acquired in 2009 by credit asset manager XSharesIn a third Advisors transaction(see involving Cross Border ETFs, for more information) , but in making the divestitureDeerfield PrimusCapital acquired the target-date ETF business ofFlexpoint New York’s Ford Corp.said “CLO managementColumbus is no longer Nova a core Credit business.” Investment An WisdomTree . Managementadditional credit deal of note involved In a deal involving a private equityAmerican firm, International ,’s acquisition of becameGroup the third-largest shareholder in by , which manages $1.8 billion in CLO assets. acquiring the 7% ownership of Deerfield Renovapaid $25 U.S. million Management plus an additional $7.5 million . WisdomTree, a New York-based ETF sponsor over five years for Columbus, owned by New York asset and asset manager, saw its AUM jump 64% between manager . the third Compassquarter of Group 2009 and 2010, to $8.9 billion. In Prior to the transaction, Chicago-based Deerfield October, the company also announced an agreement with managed $4 billion in CLO assets and $9 billion overall. Mexico’s to distribute WisdomTree ETFs As part of the deal, a Renova investment vehicle agreed throughout Latin America. Flexpoint, based in New York and Chicago, targets the and healthcare to purchase $25 million worth of Deerfield’s convertible Nuveen Investments industries and has $1 billion under management. notes, the proceeds from which will be used to help retire FAF Advisors $74 million in debt. In addition to enhancing its AUM In the more traditional funds arena, U.S. and revenue growth, Deerfield said the deal allows it to Bancorpacquired the mutual fund business for $80 strengthen its balance sheet and add “a valuable partner in million in cash and the assumption by FAF parent First Columbus Nova.” Nine months later in December, Deerfield American of Family a 9.5% shareholding in Nuveen. The FAF announced a merger with Commercial Industrial Finance business added $25 billion in AUM, primarily in the Corp. The combined firm will have $15.6 billion in AUM, funds business, to the $150 billion primarily in CLOs, making it one of the world’s largest Nuveen already managed. Nuveen, the largest manager structured credit and leveraged finance asset managers. of closed-end funds, said the deal merges its specialty in municipal bonds with FAF’s “proven and distinct The exchanged traded funds arena generatedWindward several investment capabilities, including taxable fixed income, Investmentdeals, the most Management significant involving Charles Schwab’s real assets, equities and asset allocation.” Additionally, $150 million stock-and-cash purchase of BERKSHIRE CAPITAL SECURITIES LLC | 9 (AUM: $4 billion). Based in Nuveen said the transaction “will further enhance” its

NWQ Investment Management “multi-boutiqueWinslow Capital model” consisting of seven branded asset manager that extends TIAA’s capabilities in that arena. managers, including RSBased Investments in Illinois and founded in 1986, Westchester and . The deal also cements for Nuveen manages moreOak Valuethan $400 Capital million Management in assets for institutions. a distribution relationship with the nation’s fifth-largest of San Francisco acquired North commercial bank. U.S. Bancorp said it did not have the Carolina’s , with $195 scale as an asset manager to build the FAF business and million in mutual fund assets. The company’s flagship cited the benefits the alliance would offer to customers Oak Value fund was subsequently rebranded under the RS name. Oak Value, founded in 1986, said the deal will THE CONSOLIDATION TREND IN CANADA’S Guardianallow it to Life“focus Insurance exclusively” on investment management while benefitting fromDearborn RS’ scale. Partners RS is majority owned by ASSET MANAGEMENT INDUSTRY . In a deal Thirdbetween River two Capital Chicago firms with past ties, addedStifel small-cap Financial CONTINUED APACE. Corpcapabilities withMissouri the acquisition Valley Partners of . In a transaction between two St. Louis firms, First .Banks, bought Inc , an institutional manager with $800 million in AUM that was owned by . Scotiabank The consolidation trend in Canada’sDundeeWealth asset management Madison Dearborn Partners industry continued apace, with ’s $2.3 in its wealth management business. In 2007, Nuveen was billion purchase of the 82% of (AUM: acquired by in the largest $42 billion) it did not already own. The cash-and-shares asset management deal to date by a private equity firm Affiliated Managers Group deal — the largest asset management transaction of ($6.3 billion, including assumption of debt). 2010 — makes Scotiabank the fifth-largest mutual fund tackled the market last year to manager in CanadaDynamic and further depletes the domestic cut three deals that expanded its internationalTrilogy capabilities, Global ranks of independent asset managers. Dundee adds $31 Advisorsincluding one U.S.-based target that specializes in billion in its line of funds to the $24 billion emerging and global markets investments, Scotiabank already managed under its brand name, (AUM: $12 billion). Based in Florida and New giving the combined business nearly an 8% share of the York and started up in 1999, Trilogy manages $12 billion funds market. Dundee, whose overall AUM jumped 27% in assets for institutions and retail customers in the U.S., in the year through September 2010, also adds third- Europe and Asia-Pacific. AMG chairman and CEO Sean party distribution capabilities. Rick Waugh, Scotiabank Healey said he continued to see “substantial opportunities” president and CEO, said the deal “demonstrates our strong for deals for traditional and alternative firms, “increasingly commitment to build our wealth managementCI Financial presence characterized by succession-driven transactions.” In in Canada.” Scotiabank, which also has a large minority keeping with AMG’s affiliate model, Trilogy management interest in CanadianWaterStreet mutual fund Group giant , will retain a “substantial portion” (For of equity additional while AMG deals, made two other dealsBNP last Paribas year, acquiring (see Wealth Ontario-based Management) see“reinvesting Cross Border a significant and Alternatives.) portion of the transaction multifamily office and the Panamanian proceeds into Trilogy products.” wealth business of . Evercore Partners Fiera Capital Sceptre Investment Counsel In a deal between two independent Canadian asset Atalanta Sosnoff Capital paid $69 million (with a potential managers, and earnout payment of $14.7 million) for a 49% stake in merged to create a new publicly traded company with , one of two asset management $30 billion in AUM (about three quarters from Fiera).Fiera deals the New York investment bank concluded last year. SceptreThe $71 million transaction involved a share swap that Atalanta, also based in New York, manages $10 billion in left Fiera Capital with 60% of the new company, assets for institutions and high net worth clients and has a . SIC said the deal “leverages the strengths of large-cap and balanced-investment orientation. Founded in both companies to create a significant player in the 1981, the firm’s AUM has grown fivefold since 2002. In an investment management sector.” SIC, which had been a interview last May with Pensions & Investments, Evercore public company for 24 years, ran a family of eight mutual president and CEO Ralph Schlosstein called Evercore’s funds and had a largely institutional focus, along with a asset management business “a $5 billion collection of high net worth business. In recent years, the company had early-stage businesses” that will be enlarged through been dogged by performance issues and redemptions, as acquisitions, but noted that Evercore will operate with well as succession issues following the death of its CEOIGM “very tough standards” and seek partnershipsBlackRock in which Financialin 2009. Fiera, which wasInvestment privately Planning held, also Counsel targets the managers “own a significant piece of equity.” Together with institutional marketplace. In a third all-Canada deal, TIAA-CREF Partners in Planning , Schlosstein co-founded in 1988. wealth unit Westchester Group In smaller U.S. deals, acquired a “controlling acquired , a financial services firm 10interest”| INVESTMENT in MANAGEMENT, an INDUSTRY agricultural REVIEW asset ~ 2011 that operates a mutual fund business.

Within the U.K., there were two significant domestic Aberdeendeals, both Asset of which Management targeted firms with traditional and alternative fund businesses. At the start of the year, paid $130 million for Royal For the second year in a row, the number of Bank of Scotland’s asset management unit, which had two- Wealth Management thirds of its $20 billion in AUM in long-only multi-manager transactions in the wealth management sector funds and 30% in funds of hedge funds. In the near term remained modest at just 39 and included just two at least, the acquired alternatives business took a hit, major deals, the most significant of which involved suffering net outflows of $800 million over the summer, M&T Bank Corp.’s acquisition of Wilmington while Aberdeen’s overall AUM rose slightly. Trust (the second saw South Africa’s Investec add Aberdeen, which in 2008 added to its large property to its large minority stake in London’s Rensburg funds unit with the acquisition of London’s Goodman Sheppards; see Cross Border). As was the case Property Investors, has been seeking to round out its with several significant deals in 2009, M&T Bank’s portfolio with a hedge fund business, driven by CEO Martin Gilbert’s conviction that the investments have purchase of Wilmington Trust was driven by the solid growth prospects. As part of the transaction, RBS financial crisis, as the venerable Delaware-based agreed to provideCoutts Aberdeen & Co. preferred access to its wealth bank and wealth manager fell victim to a balance management network, including the venerable British sheet weighed down by souring construction loans. private bank, Bruce Van Saun, chief financial officer of government-owned RBS, called the deal “another step in our plan to restructure [the bank] around its core customer franchises.” To help pay for the transaction, M&T Bank, of Buffalo, NY, with 750 branches across Aberdeen did a share placement equivalent to more than seven states, picked up Wilmington for what was largely 8% of its ordinary share capital. F&C Asset Management Thames considered a bargain price of $351 million in stock — a RiverIn the Capitalsecond deal between London-based asset value nearly 50% below the bank’s share price just a few managers, acquired days prior to the announcement. That announcement , which offers a mix of traditional, specialty coincided with Wilmington’s large writedown on its loan and alternative funds and manages $6.4 billion in assets. F&C paid $50 million, a price that could reach $80 million based on performance. F&C chief executive Alain Grisay called the deal “an important component of our strategy of diversifying our revenues beyond our core insurance Wealth Management2006 Transactions2007 2008 2009 2010 clients” while citing Thames Rivers’ Number of Transactions 39 “highly complementary set of investment capabilities, including expertise in Combined Value ($B) 65 87 80 47 $9.9 absolute return.” Thames Rivers’ products Total Seller AUM ($B) $7.2 $11.6 $5.6 $5.2 $518 also deliver superior profitability, with F&C noting the company’s “average net Average Deal Size ($M) $284 $227 $388 $246 $254 margin” in 2009 of 90 Average Seller AUM ($B) $111 $133 $70 $111 $13.3 basis points of AUM compared with its own Source: Berkshire Capital Securities LLC 22 basis points. $4.4 $2.6 $4.9 $5.2 Prior to the deal, the majority of F&C’s $160 billion in AUM was in fixed income assets while 60%Friends was managed Provident for the insurance industry, a legacy of its former parent, insurer . In 2009, Friends Provident distributed its majority stake in portfolio and a third-quarter loss of $365 million, the sixth F&C to shareholders, leaving the firm as an independent, consecutive quarterly loss. In addition to the troubled publicly traded asset manager. Thames River, founded banking business, M&T gains one of the best-known names in wealth management: Wilmington was started in 1998, manages a broad portfolio that includes globalWater & in 1903 by the du Pont family and has $27 billion in AUM Agriculturalcredit funds, fixedAbsolute income, Return equities, Fund property, multi- manager hedge funds and niche funds such as the in its wealth business, which targets individuals with $10 (AUM: $38 million). million or more in investible assets. Outside its wealth advisory unit, Wilmington has another $31 billion in AUM, BERKSHIREincluding a CAPITAL mutual fundsSECURITIES line and LLC | 11

Cramer Rosenthal McGlynn Roxbury Capital Managementassets managed at two affiliates: value investor Florida. Strategic Financial had $750 million in AUM prior and growth manager to the deal. UMB Financial Corp. Prairie . Calling Wilmington “a big upgrade and CapitalThe largest Management such regional wealth deal involved two Kansas addition to what we do,” M&T president Mark Czarnecki City-based firms, as acquired told the Buffalo News, “We wanted as a bank to diversify , which manages more than $4Reams billion our sources of fee income, and Wilmington gives us the Assetfor high Management net worth individuals Co. (see Money and institutions. Management) UMB, chance to do that.” M&T, with a branded lineup of mutual which last year also acquired institutional manager funds and a trust business, has $22 billion in AUM. On a , said pro forma basis, M&T said its fee income as a percent of the transaction reflects its “strategic focus” on the wealth total revenue will jump five points to 39% while the trust arena and praised Prairie for its expertise in a range of and wealth management component of its fee income BNY Mellon asset classes and “unique accessGeorge to many K. Baum leading Holdings global business will more than double to 34%. I(3) Advisors investment managers.” Prairie, whose owners included expanded its Canadian wealth business with Kansas City investment bank , StanCorp Financial Group the acquisition of Toronto-based (AUM: will operate as an independent division within UMB. $3.4 billion). BNY Mellon called the deal part of the effort Portland, Ore.-based insurer , to “accelerate our global which targets the “mass expansion and seize new affluent”Redwood market, Investment acquired opportunities in dynamic REGIONAL AND LOCAL FINANCIAL SERVICES Adviserstwo small IndianapolisWebb markets.” In an interview FIRMS, WHICH HAVE BEEN EYEING WEALTH Financialfirms, Advisers with Reuters following and the acquisition, the new MANAGEMENT AS A WAY TO DIVERSIFY , in the head of BNY Mellon’s process climbing above the wealth division, Lawrence $1 billion mark in AUM. Hughes, said his group AND STRENGTHEN EARNINGS, WERE AGAIN In a transactionForum between will continue to pursue Financialtwo independent Management suburban acquisitions in markets REPRESENTED AMONG BUYERS LAST YEAR. Chicago firms,Pinnacle where the company has Wealth Management an existing presence. The merged with wealth division accounts to for around a quarter of the create a wealth manager revenue generated by BNY with more than $500 million Mellon’s asset management in AUMRehmann that operates Financial under the Forum name. The deal was Wunderlichbusiness. I(3) Securities was started by Ernst & Young in 2005. RBCIn driven by the demands of scale and succession-planning Wealtha second Management and smaller North American cross border deal, issues. , a sizable Saginaw,Cotter Mich.-based Advisory of Memphis acquired five of Groupaccounting,Dawson consulting Wealth and wealth Management management firm, ’s Michigan branches to expand its acquired two Cleveland wealth managers, presence in that state,Coil adding Investment $700 million Group in assets under and , adding a administration. Wunderlich, founded in 1996 and partly total of $400 million in AUM to the $1 billion it already owned by Norway’s Royal Bank of Canada, serves private managed. In explaining the decision to sell, Dawson CEO clients as well as institutions and has $3.8 billion in AUM. D. Michael Sherman said that in addition to Rehmann’s RBC Wealth is part of . “strong wealth management division,” its new owner Regional and local financial services firms, which have provided “a full range of tax, accounting, assurance and business consulting services.” Rehmann said it will seek been eyeing wealth management as a way to diversify Silver Bridge and strengthen earnings,Drexel were Morgan again represented & Co. among wealth management acquisitions elsewhere in the U.S. buyers last year. In a deal between two PhiladelphiaMcCabe Capital firms, Boston-based wealthH&S Financial manager Advisors extended Managersfinancial services firm enhanced its its footprint into the San Francisco area via its first wealth capabilities with the acquisition of acquisition, of , with which it had . The deal adds $1.3 billion in AUM and another an existing client-based relationship. The deal adds around $500 million under advisement to the $6 billion Drexel $400 million in assets under advisementSilver toBridge the $1.6 Family billion already managed. The company said it will benefit from OfficeSilver BridgePartners already handled. Simultaneously, Silver McCabe’s “longstanding relationships” with global asset Bridge announced it would launch managers and expertise inStrategic international Financial and alternative Partners “exclusively for the needs of Northerncomplex investments. McCabe will operate as an independent Trustand sophisticated Waterline families Partnersand family offices.” In another Pittmandivision. Memphis-basedFinancial Services transaction involving West Coast expansion, extended its Southern presence via the acquisition of acquired (AUM: $800 million) Sanders Morris Harris Group , an established wealth of . manager12 | INVESTMENT in Birmingham, MANAGEMENT Ala., that alsoINDUSTRY has an REVIEW office in ~ 2011 of Houston cut two

Investor Financial Solutions Scotiabank small deals, paying up to $1 million for 51% of “very much focused” on expanding its wealth business. Global Financial Services, a California wealth manager with Outside the U.S., , which last year merged $110 million in AUM; and acquiring 50.1% of Houston’s its domestic and internationalWaterStreet wealth Group managementBNP Paribas , with $4 billion in assets. and insurance businesses, acquired Ontario-based Publicly traded SMH has been transitioning to a pure multifamily office and ’ wealth management firm focused on both the mass Panamanian wealth business, including operations in affluent and high net worth markets,Edelman having Financial shed its the Grand Cayman and Bahamas. The Canadian bank, investmentServices banking arm at the end of 2009. The business which derives the largest proportion of its international is driven by majority-owned revenues from Latin America, said the BNP deal “will , which added seven new branches last year enhance [its] existing operations” in those markets. BNP in four major metropolitanWestwood areas Holdings and was Group named by has been under pressure from the French government Barron’s the top independent financial advisor in the to exit nontransparent financial markets. Last year, BNP U.S. Dallas-based McCarthyexpanded combined its existing private banking operations with Groupinto the Advisors Midwest through the acquisition of an Omaha, those acquired from Fortis. Scotiabank called WaterStreet Neb.-based wealth and institutional manager, “the anchor for the expansion” of its ultra high net worth (AUM: business. WaterStreet, $1 billion). Westwood formed in 2006, will called the Omaha area a FOCUS FINANCIAL PARTNERS OF NEW continue to operate under “vibrant market” while its name. Scotiabank McCarthy cited the benefits YORK ACQUIRED A STAKE IN BRIDGEWATER also madeDundeeWealth a $2.3 billion of “expanded investment (seeacquisition Money Management)of mutual fund opportunities” for its clients WEALTH & FINANCIAL MANAGEMENT, provider and the internal need for . a succession plan. Publicly BRINGING TO 19 THE NUMBER OF AFFILIATED traded Westwood has seen As part of the effort to its AUM double over the last COMPANIES IN ITS PORTFOLIO. Commerzbankreorganize its government- five years to $10.6 billion, salvaged business, with about $2 billion of continued that in its private wealth to sell offDresdner its international Bank Focus Financial Partners business. Monacoprivate banking operations, Bridgewater Wealth adding

& Financial Management Bank Audi sal-Audi Saradar Group (AUM: $320 of New York acquired a stake in million) to the long list of 2009 divestitures. For Lebanese of Maryland,Buckingham bringing Family to buyer , the deal of19 Financial the number Services of affiliated companiesWealth in Management its portfolio. expands an existing presence in Europe that includes ConsultantsIn a related deal, Focus affiliate offices in Switzerland and France. Bank Audi, the largest acquired in Lebanon, said the acquisitionSpudy & isCo. in Family line with Office its “strategy (AUM: $400 million), a 20-year-old Northern to develop its privateDottinger/Straubinger banking activities in Europe.” In a California firm. Buckingham, based in St. Louis, said the German domestic deal, took a deal presented an opportunity for geographic expansion, majority stake in , creating a firm Collins among other benefits. A frenetic presence in the wealth with $6 billion in AUM and offices in Hamburg and Munich. acquisition column for several years after its founding Stewart in 2006, Focus hit a financial speed bump for most of Publicly traded securities firm and asset manager acquired two private client firms through its 2009 as a result ofSummit the economic Partners crisis. An infusion of $50 Corazon Capital Group million in late 2009 from two investment firms, including wealth management unit, including Guernsey-based original investor , placed Focus on firmer (AUM: $570 million). The footing and is allowing it to pursue acquisitions again. London-based firm said the deal bolsters its leading The addition of Bridgewater (AUM: $200 million) extends wealth management position in the Channel Islands while Harleysville National Corp. Focus’ footprint into the Mid-Atlantic region. strengthening its office in Geneva, whereAndersen Corazon Charnley also has Cornerstone Companies a presence. In a second deal, Collins Stewart paid an initial One financial services firm, , $7.5 million in cash and shares for , divested a local wealth manager, , a London private client firm targeting “the upper end of via a management buyout. An established company, the high net worth market.” Collins Stewart, which could FirstCornerstone Niagara has Financial $2.8 billion Group in AUM and wasMillennium acquired by pay an additional $12 million in revenue-based incentives, WealthHNC in 2006.Management HNC, which was itself acquired last year by said the deal was driven in part by Andersen Charnley’s , retained its financial planning capabilities. With the two acquisitions, unit, with some $700 million in Collins Stewart has nearly $10 billion in assets under AUM. John Koelmel, president and CEO of First Niagara, management and administration and is aiming to reach told Pittsburgh Business Times last year that his bank is $15 billion by 2012.BERKSHIRE CAPITAL SECURITIES LLC | 13

of institutional investors’ overall asset allocation” and the fund of funds structure attractive “given the stability and consistency of its revenue stream, as well as the scalability Northwestern Mutual Life of its investment platform.” The transatlantic pipeline generated several Insurance’s Russell Investments notableCross deals Border while continental Europeans Pantheon was owned by continued to cherry pick local targets and global asset management unit, which has been shedding its alternative investment firms teamed up with partners in China and India. business but will continue to distribute Pantheon If an analysis by State Street has merit, Europe products. For management at Pantheon, an independent may prove to be a center of activity in the years firm from 1988 to 2004, the AMG model provides a ahead. coveted equity stake (15%). In a reference to its years as a private company, Pantheon’s global secondaries chief Elly Livingstone told Private Equity International that the new ownership structure harkens back to that earlier In a report on the $17.7 trillion European asset “partnership structure” while creating “a mechanism management industry released last September, State for recycling equity for the next generation.” The private Street opined that the financial crisis is forcing an “end equity fund of funds industry has faced challenging times since the start of the financial crisis, with fund-raising off game” that over the next five years will see the “pursuit Artemis sharply from the 2007 peak. of scale through .” The primary Investment Management targets will include asset managers divested by banks and The second deal involved another London firm, specialist firms, with the mergers resulting in companies , a 13-year-old fund manager built on “low-cost, scalable business models” or “stables of with $16 billion in AUM, primarily in retail mutual funds, boutique managers.” The European Commission’s new UCITS IV (Undertakings for Collective Investments in Transferable Securities) “master- feeder structure” could also propel deals U.S. - International 2006 2007 2008 2009 2010 as asset managers begin to create large NumberCross of BorderDeals Transactions 17 “feeder” funds from the investments currently limited to individual European Value ($B) 24 19 22 8 $3.9 Union markets. Alpha Financial Markets International - International 2006$8.3 2007$5.6 2008$0.9 20$1.409 2010 Consulting of the U.K. estimates that the master-feeder structure could generate Number of Deals 20 annual savings for asset managers of $2.8 Value ($B) 24 44 38 13 $2.0 billion to $4 billion. The pan-European UCITS funds have assets of $7.6 trillion. Total 2006$1.4 2007$6.1 2008$3.3 20$3.209 2010 Last year, the most significant cross border Number of Deals 37 transactions worldwide took place in the Affiliated Managers Value ($B) 48 63 60 21 $5.9 GroupU.K. and involved three non-EuropeanInvestec Source: Berkshire Capital Securities LLC buyers:Royal Boston’s Bank of Canada $9.7 $11.7 $4.3 $4.6 (AMG), South Africa’s and . Overall, there were 37 cross border transactions in 2010 valued at $5.9 billion, a bump up from a quiet 2009 but below the more robust as well as segregated institutional accounts, hedge funds levels of 2007-2008. Pantheon Ventures and a trust. Driven by a proprietary The larger of the two AMG deals involved the $775 million quantitative system known as “SmartGarp,” Artemis funds cash acquisition for 85% of , one of delivered strong results during the bull markets of the last the world’s largest private equity fund of funds managers, decade but have underperformed in recent years. AMG with $22 billion in AUM (invested about equally in Europe took a majority stake in Artemis, which, like Pantheon, and the U.S., with a small portion in Asia). The transaction started lifeBNP as Paribasa private firm that ultimately was swallowed is the largest in AMG’s acquisitive 17-year history, with up by several banks in a rolling series FTof mergers,Adviser most a final price tag that could reach $1 billion depending on recently . Management at Artemis retained a Pantheon’s five-year performance; it also adds private stake of more than 25%, according to , a holding equity funds to the company’s portfolio. AMG president that Artemis chief executive Mark Tyndall said “will allow 14and |CEO INVESTMENT Sean Healey MANAGEMENT called private INDUSTRY equity a “core REVIEW element ~ 2011 us to continue to attract and retain talented staff and to

Phillips, Hager & develop our business in the best interests of our clients.” Northinvestment Investment independence. Management In 2008, RBC made another With the two acquisitions, global equity and alternative billion-dollar deal when it acquired products makeTrilogy up Globalnearly Advisorstwo-thirds of AMG’s earnings. , one of Canada’s largest A third U.S.-based deal for emerging and global markets independent asset managers at the time. specialist (see Money Management) (AUM: $12 billion) The last majorRensburg cross Sheppardsborder transaction in the U.K. further extended AMG’s exposure to international equities involved Investec’s $600 million purchase of the 53% of strategies . Meanwhile, BNP London’s it did not own, via a share Paribas was involved in aMontag second &cross Caldwell border divestiture swap, with the price representing a 48% premium to involving a management buyout of its Atlanta-based Rensburg’s stock price. The deal completed a partnership growth equity manager, . Founded in the two firms began in 2005, when Investec took a 47% 1945, Montag has $14 billion in AUM in mutual funds and stake as part of a transaction involving the sale of its separate accounts for individuals and institutions. Like U.K. private client firm, Carr Sheppards Crosthwaite, to Artemis, Montag & Caldwell ended upABN in BNP’sAmro arms after Rensburg. Stephen Koseff, CEO of Investec, called full the French bank joined the consortium that acquired and ownership “the natural next step for both businesses” then split up former Montag parent in 2007. BlueBay Asset Management while Rensburg cited ownership “clarity.” Rensburg has Royal Bank of Canada’s $1.5 billion cash acquisition $18 billion in funds under management. Investec is South of publicly traded was Africa’s fifth-largest bank and third-largest asset manager. testament to the global ambitions of that nation’s largest bank and the more generalized strength of Canadian banks, which 2009 Buyer: U.S. International International avoided the subprime Seller: International U.S. International Total excesses of their neighbors Cross Border Transactions by Domicile and Type to the south. It also followed Wealth Management 6 the bank’s announcement in Money Management 0 1 5 10 September 2010 that it had split its international wealth Other 2 2 6 5 management business into Total 53 30 132 21 separate U.K. and emerging markets units. Founded in 2001, 2010 Buyer: U.S. International International Seller: International U.S. International Total BlueBay manages $40 billion in assets for Wealth Management 4 institutions and high net worth Money Management 15 individuals in long-only and 2 0 2 alternative European and Other 53 2 10 18 emerging markets fixed income Total 10 75 208 37 products. The company’s niche has served it well in the current Source: Berkshire Capital Securities LLC environment, as it generated $10.2 billion in net inflows during the 2010 financial year (ended June). The largest RHJ International single fund is the long-only and European-focused BlueBay Investment Grade Bond Fund Brussels-basedKleinwort private Benson equity firm (AUM: $14 billion). followed up on its $370 million acquisition of U.K. private RBC said the acquisition enhances its position as a “top- bank KBC in 2009 by paying $29 million for 10 global wealth manager” by adding complementary the Dublin-based asset management business of Belgian products, a partner with a track record for innovation, and financial services firm . The Irish business manages distribution muscle in Europe and Japan. RBC paid a 29% $5.6 billion in assets for global institutions, with a focus on premium over BlueBay’s share price and approximately 19 dividend-paying and environmentally oriented equities, times projected 2011 earnings. George Lewis, group head as well as multi-asset strategies — areas that RHJ said of RBC’s wealth unit, said the acquisition “aligns” with the have “strong growth prospects.” RHJ said the acquisition, bank’s “view that the wealth management segment will which nearly doubled its AUM, is part of a strategy to build a wealth management and advisory business under the continue to grow at a faster pace than other parts of the State Street Global Advisors global financial services industry.” For its part, BlueBay venerable Kleinwort name. said the deal provides scale while offering operational and In a second deal in BERKSHIREIreland, CAPITAL SECURITIES LLC | 15

Bank of Ireland Asset Management acquired the asset management unit of , . River Road, based in Louisville which is restructuring its business as part of a government and founded in 2005 with $30 million in AUM, manages bailout. The $80 million acquisition nets SSgA $36 billion $3.6 billion for institutions, its growth fueled in part by in AUM in a broad mix of actively managed funds for the distribution muscle of former minority shareholder institutionsBank and intermediaries. of Ireland Asset SSgA Management primarily manages ABN Amro. River Road, which bought out that minority passive funds for institutions. The company said the interest to become a fully employee-owned company in addition of fits with 2008, cited the “financial strength and global presence” its clients’ demands “for more solutions-driven investment of Aviva in explaining the sale. Aviva said River Road’s management strategies that equity focus complemented its span the risk spectrum.” In a fixed income orientation and second transactionBanco involving a TORONTO-BASED FORESTERS called the acquisition a “significant Santandergovernment-inducedAllied divestiture step in the development of our byIrish an BanksIrish bank, ACQUIRED NEW YORK’S FIRST business in North America.” Aviva Bank Zachodni acquired WBK AIB Asset also stressed the continuing ’ 50% interest in independence of River Road’s Management INVESTORS CONSOLIDATED. Evercore operation. Partners of Poland. Banco In the third quarter, Santander paid $210 million for added a cross border the business (AUM: $3.6 billion) acquisition with an asset as part of a larger $3.7 billionBank Zachodni WBK management component to deal involving the purchase of the two domestic deals it made AIB’s majority share in , a retail earlier in the year, acquiring 50% of Brazil’s G5. Based and commercial bank. The asset management business is in Sao Paulo, G5 is an investment bank and institutional expected to account for around 6% of the Polish bank’s net Deutsche Bank and wealth manager whose AUM doubled between the profit in 2011. third quarter of 2009 and 2010 to $2.3 billion. Evercore wasQS involvedInvestors in(see three Alternatives) cross border deals, paid $20 million in cash and securities, with potential including a management buyout of its New York-based earn-out payments through 2013 and a provision that quantitative firm, . The allows the New York company to acquire full ownership acquisition alsoXShares took placeAdvisors in New York, with the German beginning in 2014. In cementing the deal, the two firms bank picking up five target-date exchange traded funds built on a two-year “strategic alliance.” Ralph Schlosstein, (ETFs) from , with $140 million in AUM. president and CEO of Evercore, called Brazil “an XShares was founded in 2005 but struggled for much of its important new market for wealth creation”(See Wealth and “aand great Money brief life, having liquidated nearly two dozen specialized Managementcountry in which for information to expand our on wealthEvercore’s management two other deals.)and ETFs heavily weightedBNDRE toward Holdings health care. Following investment management activities.” the Deutsche Bank deal, parent company XShares Group changed its name to and said it would Several Canadian firms took advantageForesters of the nation’s focus on the U.S. distressed real estate market. A third deal Craigs Investment Partners currency parityFirst with Investors the greenback to expand in the U.S. saw Deutsche Bank take a 49% stake in New Zealand’s These included Toronto-based , which acquired , which has brokerage, assetRoyal New York’s in a deal between two privately Bankmanagement of Scotland and wealth management businesses. In 2009, held firms with long histories and similar middle-market Craigs management bought the 50% stake owned by customer bases. For insurer Foresters, founded in 1874 (which RBS acquired from ABN Amro in as a fraternal benefit society, the acquisition provides 2007). entry to the U.S. asset management market, along with the of AustraliaInnovest acquired Kapitalanlage the Austrian asset AG opportunity for cross-selling on both sides of the border. management business of German electronics, energy and Foresters has existing insurance operations in the U.S. and health care giant Siemens AG, . the U.K. A diversified financial services firm that includes The Vienna-based business manages approximately broker-dealer and insurance units, First Investors, founded $5 billion for institutions in Germany and Austria, in 1930, has $6.6 billion in AUM and a large, branded including the Siemens pension fund, with a specialization lineup of mutual funds. First Investors, which will operate in risk-budgeting and asset allocation strategies. as an independent unit within Foresters’ U.S. division, Macquarie said the deal provided “a new hub for described the deal as “the culmination of a thorough search for a business partner with a and Macquarie Funds Group in Central Europe — consistent Sprott Inc. with Macquarie’s strategy to develop a global asset financial resources” to position it for “significant growth.” Aviva Investors Rule Investments management firm.” Another Toronto firm, , paid $90 million of the U.K. crossed the AtlanticRiver to make Road its in stock for (AUM: $480 million), first acquisition since its formation in 2008 by insurance a California asset manager and broker-dealer that giant16 | and INVESTMENT parent Aviva, MANAGEMENT buying value INDUSTRY investor REVIEW ~ 2011 specializes in the natural resource sector. Sprott, which

Morgan Stanley also manages natural resource investments, said the which has a West Coast banking presence and a minority acquisition will diversify its product line and asset and stake in , has set aggressive goals for its earnings mix. In addition, the company views the addition international business. Japanese banks in general are of Rule as a means of expanding into the U.S. market with seeking a larger international footprint to counteract the BBVA its branded line of funds. “We really look forward to being diminished prospects they face at home. CITIC the footprint for Sprott’s U.S. growth across a range of Spanish bank formed a private banking joint venture products,” said Rick Rule, chairman of Rule Investments. with the influential Chinese investment firm , Publicly traded Sprott, which had $6 billion in AUM building on a related management agreement the two prior to the deal, could pay companies signed Chinain late CITIC 2009. additional performance-based BankThat same year, BBVA also incentives in 2015. In a third IN A DEAL INVOLVING AN INDIAN raised its stake in East deal involving a Canadian CI Financial Capital to 15%. A AsiaChina-focused Growth buyer and American seller, BUYER, RELIGARE ENTERPRISES CROSSED Investorsdeal within Sweden saw mutual fund giantHartford acquire Financialacquired the Services Canadian Group THE PACIFIC TO PAY $200 MILLION FOR (AUM: $340 million), fund business of an asset manager specializing , A MAJORITY STAKE IN SAN FRANCISCO’S in Chinese investments. East consisting of 18 diversified Capital manages $6 billion in funds with $1.7 billion in NORTHGATE CAPITAL. assets, with a focus on Eastern AUM. CI Financial described European financial markets. Hartford’s Canadian unit as “Having two specialized one of the nation’s fastest- investment teams under the growing fund companies with same roof covering these two a “strong lineup of portfolio exciting parts of the emerging managers and excellent relationships with dealers and markets universe will be a very valuable additional advisors.” Hartford said the divestiture was in line with a offering to our investors,” says Peter Elam Hakansson, focus on its “core U.S. operations.” chairman of East Capital. Sumitomo Mitsui Asia’s two key emerging markets continued to draw BNY FinancialIn India, a Grouphigh-profile transaction with an asset multinationals in search of partners. China registered Mellon managementKotak component Mahindra involved several deals, in lineWestern with recent Securities trends, including ’s $300 million purchase of a 4.5% ’s assumption of a 49% stake in a fund management stake in . Founded in 1985 and now joint venture with , a 9-year-old Xi’an- the nation’s fourth-largest private bank, Kotak Mahindra based brokerage. BNY Mellon, which in 2009 was granted manages a total of around $8 billion in mutual funds, status by the Chinese government as a qualified foreign having registered 89% growth in AUM during its fiscal , said it would initially target the retail 2009 year (the industry as a whole saw 52% growth). In market but also plans to pursue subadvisory mandates addition, Kotak Mahindra has $1.2 billion in assets under from non-Chinese institutional investors. Separately, BNY management and advice in real estate and private equity Mellon signed a memorandum of understanding with the funds. In 2009, the government imposed new regulations Shanghai Stock Exchange to collaborate on ETFs that will on the Indian mutual fund industry that limited fees and be tied to BNY Mellon Depository Receipt Indices. Religare Enterprises ECPI Chinese provided for greater transparency. In a bid to capitalize on the expected growth of socially Securities Index Company In a deal involvingNorthgate an Indian buyer, Capital responsible investing in China, Italy’s and CSI crossed the Pacific to pay $200 million for a majority stake ECPI China ESG 40 Equity Index(CSI) formed a joint venture in San Francisco’s (AUM: $3 billion), index linked to “sustainable” Chinese companies. The a private equity fund of funds firm that includes three will be made up of 40 former professional football players among its founders. Chinese companies adhering to environmental, social and Ten-year-old NorthgateAmerican serves institutions International and Group high net governance (ESG) principles. ECPI, which completed a worth individuals. Religare, which in 2009 made a bid with management buyout last year from parent Mittel Group, Macquarie Group for ’s is a “sustainability” research, ratings and indicesMitsubishi provider external asset management business, says it plans to UFJin business Financial since Group 1997. CSI is a joint venture between spend up to $1 billion to build a diversified U.S.-based the Shanghai and Shenzhen stock exchanges. global asset management company with a goal of taking became the SYWGfirst Japanese BNP Paribas firm to it public. Religare chief executive Sunil Godhwani said the Assetinvest Managementin a Chinese fund joint venture, as it bought BNP “partnership” with Northgate “will accelerate our process Paribas’ 33% stake in 6-year-old of seeking similar partnerships in other asset classes, (AUM: $1.5 billion). The French bank including both alternatives and traditional in developed was forced to sell to comply with Chinese regulations and developing markets.” For Northgate, the link with disallowing multiple fund joint ventures. Mitsubishi, Religare provides greaterBERKSHIRE access CAPITAL to emerging SECURITIES markets. LLC | 17

Sumitomo Mitsui Financial Group wasBarclays involved in a second cross border transaction within Japan, forming a private banking joint venture with that draws its name from both firms. Barclays, seeking to expand its Against the backdrop of what appears to be a wealth management footprint, said its partner provides Real Estate “unparalleled access to the Japanese high net worth stabilizing if still uncertain property market, the client base.” In 2008, SMFG acquired a minority stake in real estate advisory sector last year registered an Barclays as the BritishCitigroup bank, reeling from the financialNikko impressive 18 transactions valued at $960 million, Cordialcrisis, sought to bolster its capital base. In 2009, the with several of the deals driven by post-financial SMFG acquired ’s Japanese brokerage, crisis corporate reorganizations. The lineup . Although Japan is the world’s second-largest of buyers included such significant players as Guardian Life Insurance Company of America, IN THE HEDGE FUND INDUSTRY, Island Capital Group and Rockefeller Group International. The slowly-but-surely consolidating WHERE CROSS BORDER ACTIVITY advisory sector could witness a particularly important deal this year if ING Groep finally REGULARLY ACCOUNTS FOR A divests its large real estate business, an action the firm reviewed last year. Morgan Stanley, LARGE MAJORITY OF DEALS, BUYERS which suffered significant losses in its MSREF VI CONTINUED TO LOOK OUTSIDE THEIR International real estate fund, is also mulling the options for its advisory business. DOMESTIC MARKETS.

Europa Capital The Rockefeller Group International (RGI) investment in European real estate fund manager marked the expansion of the group’s large and diverse property business into Europe “across multiple risk/ wealth market, investors are far more conservative than return strategies and asset classes,” Rockefeller said in a in other parts of Asia, showing a decided preference for Mizuho Financial Group statement. Founded in 1995 and based in London, cash investments. Europa has raisedMitsubishi six real estateEstate funds Co. and invested Within the U.K., Tokyo-based Group $8 billion throughout Europe; it has $2.8 billion in AUM. sold its debt-management business (AUM: $6 billion) RGI, owned by took a majority Mizuhoto London Investment private equity Management firm (U.K.) for $29 million, stake in Europa, with management retaining a “significant with 3i taking a 55% stake and management the rest. minority interest.” Kevin Hackett, president and CEO , established of RGI, called the investment “a significant step in the in 2005, managed funds that invest in senior and realization of a RGI/MEC global real estate investment subordinated corporate debt. 3i, with an existing but management platform.” Calling this a “dynamic time” for small credit unit, said the acquisition “will create an the real estate market and property fund management enhanced debt platform to grow profitably into the business, Europa said it had “significant scope for future.” The company, like other private equity firms developing our business from its established base through the introduction of a strategic investor.” negatively impacted by the financial crisis, has been Merrill Lynch seeking to diversify its earnings. A second transatlantic deal involved a management In the hedge fund industry, where cross border activity buyout of two Peakside propertyCapital funds by their regularly accountsCredit Suisse, for a largeGottex majority Fund Management of deals, buyers European investment Real Estate team. Opportunity The new Fund London-based Bosphorus continuedNatixis Global to look Asset outside Management their domestic see Alternatives markets, firmReal thatEstate emerged, Fund I , acquired Merrill’s includingsection and and ( , with a combined $635 millionBank in of ). Americacapital commitments. Peakside, which will continue to manage legacy investments from Merrill parent , said it intends to capitalize on “opportunities that are rapidly emerging in real estate in Europe.”KBC Merrill Assetdescribed Management the holdings as non-core. In a second buyout involving a non-core divestiture by a large parent, 18 | INVESTMENT MANAGEMENT INDUSTRY REVIEW ~ 2011 of Belgium sold its U.K. subsidiary

Lothbury Investment Management to local management. The new company, reorganized as the strategy he employed in the 1990s “to the present , specializes in direct environment,” involving the acquisition of real estate and indirect property investments in Europe and has BMB Group debt derivatives and the creation of special servicing and $1.3 billion in AUM. related businesses to manage them. Lowe Enterprises , an aggressive alternative asset manager Guardian Life InsuranceLowe Enterprises acquired Investors a “substantial, non- based in the Cayman Islands and co-founded by a member controlling interest” in ’ real estate of Brunei’s royal family, made its presence felt with advisory unit, . As part of two European acquisitions designed to expand its portfolioContrarian of real estate Capital Partnersinvestments. In the first, BMB acquired BeaconLuxembourg-based Hospitality Partners and its advisory subsidiary, , which has 2006 2007 2008 2009 2010 a client base similar to its new parent’s Real Estate Transactions of Middle Eastern and Asian investors. In Number of Transactions 18 explaining the deal, BMB referenced the Combined Value ($M) 10 17 5 6 $960 “enormous opportunities in real estate Total Seller AUM ($B) $79.8 globally” being generated in the “present $1,536 $2,044 $358 $280 economic environment.” In the second Average Deal Size ($M) $31.1 $53.6 $20.8 $13.8 $53 deal announced shortly thereafter,Alliance CapitalBMB Average Seller AUM ($B) $154 $120 $72 $47 $4.4 Groupcommitted to invest $500 million in Dutch real estate advisor BMB Source: Berkshire Capital Securities LLC$3.1 $3.2 $4.2 $2.3 Alliance (AUM: $3.7 billion) in return for a shareholding in a new company, . Alliance, which has commercial property investments in Europe, said the link with BMB will provide access to new sources of capital as it seeks to “consolidate an industry-leading position in CA THERE WERE SEVERAL DOMESTIC U.S. DEALS these turbulent times.” Immobilien Anlagen Europolis In other EuropeanOesterreichische deals, Austrian property Volksbanken developer AG OF NOTE. ONE OF THE MORE INTERESTING paid $370 million for the real estate unit of , DEVELOPMENTS INVOLVED THE RETURN TO with half the price deferred over five years. Europolis, also based in Austria, adds more than $2 billion in commercial THE DISTRESSED PROPERTY MARKET OF REAL property assets in central and eastern Europe to the $5 billion CA Immo already managed. CA Immo said it is ESTATE INVESTOR ANDREW FARKAS. confident that “this is a good time in the property cycle to be investingMann in [Eastern Immobilien-Verwaltung Europe] for the long term.” In a second domestic deal in neighboringIVG Immobilien Germany, property company acquired more than 18% of the shares in , a real estate manager with $31 billion in AUM. what the companies called a “strategic partnership,” the There were several domestic U.S. deals of note. One of New York-based insurer will invest more than the more interesting developments involved the return $200 million to expand Lowe’s portfolio. Lowe Enterprises to the distressed property market of real estate investor Investors, based in Los Angeles, has $6 billion in CenterlineAndrew Farkas, Holding who Co. made a wager on the commercial diverse real estate assets managed individually and in mortgage-backed securities market with the purchase of commingled funds. Lowe Enterprises Investors co-CEO C-III Capital Partners’s CMBS fund management and Brad Howe said the partnership “positions us to take loan special servicing businesses.Island The Capital deal was Group done advantage of the recovery of the real estate market and through , a new subsidiary of Farkas’ will allow us to better serve our clients by improving our privately held real estate firm, . The capital resources.” Similarly, Guardian said the current deal involved consideration of $110 million, consisting environment offered “an opportune time to invest in real Trecap Partners of $50 million in cash and $60 million in assumed senior estate” while praising the track record of its partner. debt. Based in New York, Farkas made his name and Capmark Investments fortune during the 1990s by purchasing distressed real bought the real estate equity investment estate limited partnerships. Farkas said the creation of advisory business of troubled C-III represents the “adaptation and implementation” of (AUM: $4.3 billion),BERKSHIRE including CAPITALinvestment SECURITIES management LLC | 19 contracts and general partnership interests in real estate amassed $153 billion in earnings since setting up shop. equity fundsCapmark in the U.S. Financial and Europe. Group Capmark Investments As institutions replace wealthy individuals as thePensions primary & filed for Chapter 11 in January 2010, just a few months investorsInvestments — in 2009, institutions accounted for 75% of after parent took the same assets at the 11 largest hedge funds ranked by action following a downturn in its commercial property — funds run by the likes of Paulson and Soros business. Philadelphia-based Trecap was formed in 2009 continue to gain dominance in an industry with as many as by several veterans of Equitable Real Estate Investment 7,000 players. Management to provide investment management and consulting services to institutions and high net worth advisors. One of those principals, Douglas Tibbetts, in 2009 IN 2010, TWO OF THE INDUSTRY’S BIGGEST called the current environment “the real estate ‘Super Bowl of the century’ if investment management firms are PLAYERS TEAMED UP IN ONE OF THE well-capitalized and deploy the capital wisely.” Charter Hall Group MacquarieIn an Australian Group transaction, property fund manager LARGEST HEDGE FUND DEALS TO DATE. paid $270 million for a majority of ’s real estate management platform, transforming itself into one of the nation’s largest specialist real estate fund managers, with some $9 billion Pensions & Investments in AUM, two-thirds derived from Macquarie. Macquarie, which has been exiting its traditional listed specialist real The latest survey by indicates estate management fund business as part of a strategic that its universe of 95 companies managing at least $1 restructuring, received cash as well as a 10% shareholding billion in hedge fund and funds of hedge funds assets held in Charter Hall. The deal includes Macquarie’s interests nearly half the $2.2 trillion in industry assets, while the in five real estate investment trusts (two listed and three 25 largest companies accounted for 30% of that total. AR unlisted) as well as management rights to the businesses. magazine estimates that U.S. hedge funds with $5 billion Prior to the transaction, Charter Hall ran a range of or more in AUM recorded a 1% increase in assets during specialist unlisted funds. the first half of 2010 while the firms above $1 billion saw their AUM decline or flatten out. In the second quarter of 2010, Hedge Fund Research said that 93% of net inflows was placed with managers handling $5 billion or more. In addition, although 342 companies with more than $1 billion in AUM represented just 5% of the hedge funds in HFR’s data base, they accounted for 76% of assets. Since its founding in 1994, New York hedge fund Hedge Funds / Private Equity In line with these trends,Man Group in 2010, two of the industry’s Paulson & Co. has earned nearly as much as biggestGLG Partners players teamed up in one of the largest hedge aircraft manufacturer Boeing, according to a study fund deals to date. ’s $1.6 billion acquisition by LCH Investments and reported by the Financial of places the London firm among the Times. Boeing employs 158,000 people worldwide top two industry leaders, with more than $50 billion in and in 2009 delivered 481 commercial airplanes, dedicated hedge fund AUM. In total, there were 20 hedge 121 military aircraft and six satellites. Privately fund deals valued at $2.8 billion in what turned out to be a particularly robust 2010, along with two other held Paulson, which garnered public attention transactions of note that incorporated an important hedge in 2008 following the stratospheric returns it fund element. generated betting against the subprime mortgage The Man-GLG deal pairs two publicly traded and market, probably employs less than 100 people complementary firms that have experienced sharply and in truth produces nothing more tangible than diminished performances since the start of the financial financial models. crisis: Man saw its AUM drop in half from a 2007 peak while GLG watched $10 billion in AUM disappear in 2008, in part due to the departure of noted emerging markets fund manager Greg Coffey. Effectively, the deal allows both firms to replace lost assets, with GLG adding Paulson’s outsized success is testimony to both the $24 billion in AUM to theSociete $39 billion Generale Man managed prior evolution of the post-industrial economyQuantum and the riches to the deal, including $12 billion in long-only funds (the Endowmentaccrued by the fund winners in his particular industry. One majority acquired from in 2009). The of the oldest hedge funds, ’ two firms also display little overlap, with GLG providing , has earned $32 billion during its a discretionary investment style that balances Man’s 37-year life, while the top 10 hedge funds in total have 20 | INVESTMENT MANAGEMENT INDUSTRY REVIEW ~ 2011 quantitative orientation, as well as a customer base that includes ultra high net worth clients on the retail side Significantly, Credit Suisse said it had discussed the and sovereign wealth funds on the institutional end. By transaction with regulators to ensure it was not running contrast, Man’s retail customers tend to come from the afoul of new rules that limit the amount of capital banks “mass affluent” market and its investors from regions can contribute to hedge funds. In its press release, the where GLG’s presence is weaker or nonexistent, such as bank emphasized it was taking a “non-controlling interest Asia-Pacific, parts of Europe including Switzerland, and in the management company, not an investment in the South America. In 2007, after 12 years as a private concern, GLG became the first pure hedge fund to go public on the , through a reverse 2006 2007 2008 2009 2010 takeover by a special purpose acquisition Hedge Fund Transactions vehicle, Freedom Acquisition Holdings. Number of Transactions 20 After climbing nearly 50% that year, Combined Value ($M) 29 29 30 10 $2,792 the shares turned south in 2008 with Total Seller AUM ($B) $125.0 its performance and the larger market. $1,570 $8,399 $1,417 $201 In the Man deal, public shareholders Average Deal Size ($M) $57.6 $133.0 $46.2 $19.7 $140 received a cash price of $4.50 per share Average Seller AUM ($B) $6.3 that represented a 55% premium to $54 $290 $47 $20 GLG’s closing price at the time of the Source: Berkshire Capital Securities $2.0 LLC $4.6 $1.5 $2.0 deal in mid-May, albeit half of GLG’s $10 float price. The three principals and other employees who owned 50% of GLG received $3.50 worth of new Man shares for each GLG share they owned, leaving the principals with Aberdeen Asset Management a 10% stake in their new parent. funds.” In 2008, Credit Suisse also took a minority interest in in a deal that involved Fortis Bank Man, which said the transaction could yield $50 million the sale of its long-only fund management business. in annual savings and would be earnings accretive in its Nederlands’ Prime Fund Solutions 2012 fiscal year, paid nearly 7 percent of AUM and 24 Separately, Credit Suisse acquired times 2010 consensus earnings. GLG represents the second business, a leader major acquisition Man has secured in less than a decade, in hedge fund administration services, while a team of the first being the $833 million deal in 2002 for RMF commodities traders at Credit Suisse left to form their Investment Group, a Swiss fund of hedge funds manager. Blackstoneown hedge fund, Group according to the Wall Street Journal. At the time, RMF nearly doubled Man’s AUM to $20 billion. The commodities group is reportedly being backed by Man has also taken stakes in several other hedge funds , which has raised more than $1 billion over the years. in its Strategic AlliancePatria Fund II to seed new hedge funds. Credit Suisse Group Blackstone also took a 40% stake in a Brazilian alternative There were two other largeYork dealsCapital by Managementbanks, both of which investments firm, , which manages $3.2 billion in crossed borders. paid $425 million private equity, real estate, infrastructure and hedge funds. for 30% of New York’s (AUM: Blackstone said the deal will allow its partners and clients $14 billion), with earn-out payments that could drive the “to benefit from the fast-expanding business opportunities JPMorgan Chase price higher based on five-year performance. An event- in the country.” driven investor in the equity and credit markets, York was founded in 1991 and by 2000 had amassed The second majorGavea bank Investimentos deal saw also $600 million in AUM. Between 2002 and 2005, however, head to the hot Brazilian market to pay $270 million for York’s fortunes took off, with AUM jumping more than a 55% share of , which manages $6 fivefold to $7.6 billion, driven by performance and growing billion, primarily in hedge fund and private equity assets. investor interest in the asset class. During that same Gavea was co-founded in 2003 by Arminio Fraga, who was period, York chairman and CEO Jamie Dinan earned a few a fund manager for George Soros before becomingHighbridge Brazil’s headlines for picking up the Fifth Avenue residence of Capitalcentral bankManagement chief in 1999. The deal was done through disgraced former Tyco CEO Dennis Kozlowski at less than JPMorgan Chase’s alternative asset manager, the asking price — a measure of revenge for Dinan, whose . Calling Fraga “one of the finest firm lost money on Tyco. global macroeconomic hedge fund managers in the world,” Highbridge said the tie-upJ.P. Morgan provides Asset clients Management with “the ideal Credit Suisse, which aims to become a “global leader combination of local emerging markets expertise with in multi-asset-class solutions as well as alternative the global platform of .” investments,” said the relationship with York provides its Recently, a number of alternative investors have started clients with “access to a top-tier suite of products” while dedicated funds or BERKSHIREset up shop CAPITAL in Brazil. SECURITIES LLC | 21 York cited the Swiss bank’s “global reach and resources.”

Morgan Stanley QS Investors FrontPoint PartnersAnother major New York bank, , Deutsche Bank executed a spinoff from , restructured its relationship with hedge fund taking the German bank with it as a client. QSI, formed (AUM: $7 billion), with management taking a in 1999 and previously part of the bank’s institutional majority stake while Morgan Stanley assumed a minority advisors unit, has $11 billion in AUM and another share. Prior to the announcement of the deal in October, $70 billion under advisement across a range of strategies. the Wall Street Journal reported that the two sides were DeutscheGlobal also didThematic a spinoff Partners of a second New York asset discussing a preferred equity feature that would allow management arm with $9 billion in AUM, subsequently Morgan Stanley to take a “large percentage” of FrontPoint named . An institutional earnings for five years, as a way for the bank to recoup its and retail manager, GTP makes “thematic”Allianz investments, Group investment. Morgan Stanley acquired FrontPoint in 2006 including a significant niche in global agribusiness. for a reported $400 million at a time when the bank was Another German financial servicesNexar firm, Capital Group , aggressively adding hedge sold its fund of funds unit fund capabilities (four deals to of in 2006 alone). Analysts AS PART OF THE EFFORT TO SHED NON-CORE New York and Paris. Nexar view Morgan Stanley’s said the deal “reinforces decision to sell as both a ASSETS, CITIGROUP SOLD A HEDGE FUND OF our capabilities in Europe.” reaction to new financial A fund of funds manager, regulations and an effort FUNDS, SEEDING AND ADVISORY UNIT TO Nexar was started in at risk management. Noted 2009 by former hedge FrontPoint fund manager SKYBRIDGE CAPITAL. fund managers at Societe Steve Eisman was profiled Generale with backingAquiline from in Michael Lewis’ “The Big Capitalfinancial Partners services private Short” for his success in equity investor divining the collapse of the Citigroup . With the subprime market. acquisition, Nexar has more Goldman Sachs As SkyBridgepart of the Capitaleffort to shed non-core assets, than $3 billion in AUM. sold a hedge fund of funds, seeding and advisory unit Levelbucked Global the trend Investors of bank divestitures of to , also of New York. SkyBridge was alternatives by taking minority stakes in two U.S. hedge founded in 2005 primarilyViathon as a hedge Capital fund “incubator” funds, including , a 7-year-old firm and has made eight investments since then, including one that generally focuses on the direction of stock prices in last year in New Jersey’s , which runs a the technology andSAC financial Capital sectors.Advisors Level Global was credit opportunity fund. On average, the company provides foundedMount by Dave Lucas Ganek, Management who cut his teeth in the hedge $35 million in seed capital to funds. The Citi deal extends fund industry at . The second deal SkyBridge’s business into fund of funds management, was for , a global macro adding $4.2 billion in and manager with $1.8 billion in AUM thatPetershill was founded in advice. Prior to the deal, SkyBridge had $1.4 billion in AUM 1986. Both deals were done through Goldman’s London- via its investments. The deal also expands SkyBridge’s based hedgeAllianceBernstein fund acquisition vehicle, , bringing clientele, adding institutions to the high net worth its total number of investments toSunAmerica seven. Another New investors it already served. York firm, , acquired the hedge fund SkyBridge managing partner Anthony Scaramucci called and private equity unit of insurer . AB the integration of a fund of funds business a “natural fit” called the deal part of the “strategic expansion of our with his company’s platform. SkyBridge was joined by alternative investment capabilities.” In its latest annual several other bidders for Citi’s business, in a sign of the report covering the 2009 year, AB reported $3.9 billion in alternative AUM, about two-thirds of which was managed increasing interest among buyers inStepStone fund of funds. Group Citi also for private clients, primarily in hedge funds. That total Lexingtonsold its management Partners Bankrights ofand America proprietary interests to represents a tiny part of AB’s AUM ($484 billion), but $4 billion in private equity funds to AXA and . joined Citi in selling chairman and CEO Peter Kraus, installed in December off private equity funds with $1.9 billion in AUM to ’s 2008 and the former co-head of asset management at private equity unit. BoA said the transaction enables it to Goldman Sachs, has put more emphasis on expanding the alternatives business, with AB having recently introduced “manage its capital allocationBanc of America on the long Capital term Investors in terms of real estate and energy funds. risk.” In addition, BoA spunRidgemont off part of its Equity middle-market Partners AXA private equity unit, , RosenbergAllianceBernstein’s majority shareholder, French insurer into a new company called . AXA, bought out management’s 25% share of Ridgemont will continue to manage $1.5 billion in assets , a California-based quantitative manager for BoA while expanding into investment management for badly damaged by revelations that senior investment third parties. officers had waited months to reveal coding errors in The22 |New INVESTMENT York-based MANAGEMENT quantitative strategies INDUSTRY group REVIEW at ~ 2011 its computer-based risk program. The errors stretched

Financial Times back to 2007 but weren’t discovered until mid-2009. worked together as traders in Goldman Sachs. In a letter Although the problems were fixed by late 2009, they were to investors quoted in the , Montrica said not reported immediately to AXA Rosenberg’s board, it “will benefit from scale advantages including access raising issues of board oversight, transparency and risk to company management teams, better leverage with management. Ultimately, the incident led to the resignation counterparties” and enhanced back-office capabilities. of AXA Rosenberg chairman Barr Rosenberg and the Both firms have seen their assets drop sharply from the company’s director of research. A number of institutions peaks achieved prior to the financial crisis. Sciens Capital Management and asset managers also pulled mandates, including some There were several other transatlantic deals of note. $600 million from the Connecticut Retirement Plans New York’s Partners Group, a diversified Fund and Trust Funds and $400 million from the Florida State alternative asset manager withServices $6 billion in AUM, acquired Board of Administration, and the company’s total , which operates a AUM dropped in half to $32 LIKE MANY HEDGE FUNDS, GOTTEX Guernsey-based platform billion by May 2010 before of hedge fund managed stabilizing. According to HAS CONTINUED TO STRUGGLE WITH accounts (AUM: $700 reports, AXA executives million). Sciens praised had chafed under the tight DECLINING AUM, WHICH DROPPED A managed accounts for operational control Barr offering more transparency, Rosenberg had been able FURTHER 11% IN THE HALF-YEAR THROUGH including risk exposure, and to retain as a minority liquidity — characteristics shareholder. JUNE 2010 TO $7.3 BILLION, WITH of particular importance In addition to the $1.9 billion to institutions. The deal, in private equity funds MANAGEMENT FEES OFF SIMILARLY. which marked the second it acquired from Bank of hedge fund acquisition made America, AXA also picked Partnersby Sciens Groupsince 2008, was up $720 million in private concluded with Swiss parent equityNatixis investments from , which French financial services manages $26 billion in a firm H2O. At Asset the same Management time, Natixis formed a “strategic variety of alternative investments.Gottex In Funda second Management transaction partnership” with a startup London “global macro” involving ConstellarSwiss and NewCapital York firms, Lausanne-based manager, . The French firm took a fund of hedge funds manager minority stake with Natixisthe option Global to assume Asset Management majority control acquired , a small, global multi-strategy at the end of 2010, a structure “in line with the multi- firm with three fund of funds (AUM: $150 million), including one focused on Asia. boutique model”2 Amundi of (NGAM). H O is being run by two formerCredit executives Agricole in Like many hedge funds, Gottex has continued to struggle the U.K. office of , created by the 2009 merger with declining AUM, which dropped a further 11% in between the asset management units of the half-year through June 2010 to $7.3 billion, with and Societe Generale. Natixis said the new company will management fees off similarly. The company did note in benefit from its global sales and corporate infrastructure. its half-year earnings presentation that “opportunitiesIgnis Pierre Servant, CEO of NGAM since 2007, has been seeking Assetto acquire Management smaller [fund of funds] firms are available to improve the asset manager’s profitability by expanding to larger players suchCastle as Gottex.” Hill Asset Scotland’s Management the portfolio of alternative investments. Natixis’ largest did a spinoff of its specialist credit single asset class involves low-margin life insurance investment manager that mandates (29% of $750 billion in AUM), while alternative saw it retain a 49% stake, with management at Castle Hill andOssiam structured products account for 5%. Natixis also retaining the rest. Castle Hill, based in the U.S. and the U.K. acquired a majorityUnicredit stake in a Paris-based ETF startup, and with $2 billion in AUM, operated as a subadvisor for Pioneer, and was among the suitors reviewing a possible Ignis mandates, and the spinoff was reportedly done to accommodate demand for investment from third parties. acquisition of ’s Boston-based asset manager, ORIX Corp . Ignis has three other asset management joint ventures. TPG-Axon In a significant transatlanticMontrica Investment deal involving Management players from The U.S. arm of JapaneseMIG Holdings financial company . the two centers of the hedge fund universe, entered the asset management business by taking a of New York and of majorityMariner shareInvestment in Group , the suburban New London merged into a new company with more than York-based parent of hedge fund and alternative manager $9 billion in AUM. TPG-Axon, which brings the lion’s share . The two companies have had of the assets, was founded in 2005 and is an equities- a relationship for several years. Japanese media put the focused investor, while Montrica is an events-driven price at some $180 million, which Mariner management firm. The principals at both hedge funds had previously will reinvest in the BERKSHIREcompany’s CAPITAL funds. Founded SECURITIES in 1992, LLC | 23

Mariner has $11.7 billion in AUM through direct and through September to more than $290 Stenhambillion, driven Asset by affiliated single and multi-strategy hedge funds, fund of Managementinflows and improved performance. In a deal between funds and other alternatives. Mariner CEO Bracebridge two fund of funds managers, London’s Young cited Orix’s presence in Japan and elsewhere Montier Partnersadded $400 million in AUM to the in Asia as “particularly exciting as the region offers a $3 billion it already managed via the acquisition of burgeoning opportunity for both investment strategies and Genworth Financial of the U.K. Though small, Montier is distribution.” Altegris Advisors one of the oldest fund of fundsPeregrine companies, Holdings having been In a purely U.S. domestic deal, insurer established in 1966; it manages three funds. SAM, part paid $35 million for , a California firm of financial services firm , said the transaction strengthened its management and investment that acts as an advisor for wealth managers to a platform Affiliated Managers Group of independently managed alternative investments, lineup. including hedge funds and managed futures products. The In the privatePantheon equity Ventures industry, company represents $2 billion in assets. The deal provides paid $775 million for 85% of private equity fund of funds Genworth with a larger suite of products for its third-party manager — a price tag that could advisors and Altegris with distribution muscle. Genworth reach $1 billion over the next five years with performance said the deal followed a lengthy period of research among incentives. Management at London-based Pantheon, with its advisors regarding new product preferences. F&C Asset $22 billion in AUM one of the top three fund of funds ManagementTwo of the most important dealsThames in Europe River Capitalhad a hedge companies in the world, retained 15% of equity. For AMG, Aberdeenfund element Asset and Management took place in the U.K.: the acquisition provides entry to the private equity arena ’s purchase Royalof Bank of Scotland (see and at one of the industry’s more challenging moments, with Money Management) ’s acquisition of the asset the fund of funds sector particularly hard hit. In 2009, fund management businessStandard of Life Investments of funds firms raised $23 billion, far off the 2007 high- Aida. The Capital U.K. was the venue for several water mark of $56 billion, according to researcher Preqin. other deals, including ’ In the first half of 2010, the number dropped below purchaseStandard of 75% of Life , an established but $3 billion. “From our own perspective and I believe from small fund of hedge funds manager. SLI, owned by the perspectivePensions & Investmentsof almost any fund of fund manager, we are insurer , has around 15% of its $25 billion having to work harder to attract investors,” one manager in alternative AUM in a global absolute return strategy, told . with the restChuo in commercial Mitsui Asset property Trust and and private Banking equity. Still, AMG president and CEO Sean Healey called private In a separate move, SLI entered into a “strategic alliance” equity “a core element of institutional investors’ overall with Japan’s for asset allocation” and expressed confidence “the asset reciprocal asset management services on a total of more class will continue to produce superior returns and than $2 billion. SLI is the largest active manager of U.K. attract new clients worldwide.” He also cited Pantheon’s Martin Currie Sofaer Capital pension funds. “outstanding record of outperformance across a broad of Scotland acquired ’s suite of investment strategies” and the “scalability of its European long-short equity business, adding $280 million investment platform.” Pantheon,Russell which Investments derives three- in assets to the $1.2 billion in hedge funds it already quarters of its AUM from pensionNorthwestern funds, was Mutual formed Life in managed. Sofaer, established in 1986, said the sale was Insurance1982 and acquired Co. in 2004 by , the driven in part by regulatory changes in Europe and that it asset management arm of would manage its remaining business from its Hong Kong (see CrossManagement Border for at more Pantheon on AMG). said they were attracted to AMG by the opportunity to gain equity in their headquarters, maintaining only a small research presence Religare Enterprises in London. Martin Currie, which manages a total of business $17 billion in assets in active equity portfolios (26% off In a second cross border deal, , an its 2007 high), said the Schrodersacquisition enhanced its European aggressive financial services firm fromNorthgate India, paid Capital RWCequities Partners expertise and “fills an obvious gap in our long/ (see$200 Cross million Border) for a majority stakeGartmore in a San FranciscoHermes short equity business.” took a 49% stake in private equity fund of funds company, , whose $2 billion in AUM is equally split . In the U.K., and between hedge funds and long-only equity and fixed Hermesmerged their GPE private equity fund of funds businesses into income investments. a joint venture with more than $6 billion in AUM, called The deal took place shortly after two of Schroders’ key . The two companies said the combination investment managers left to join RWC and involved the will provide economies of scale and greater resources. By shareholdings of private investors. RWC, like Schroders the fourth quarter of 2010, following the departure of two based in London, has successfully recruited a number of of its leadingv fund managers and beset by client outflows, notable investment managers from major firms during Gartmore was taking steps to place itself on the sales its 10-year history. Schroders’ AUM rose 31% in the year block. 24 | INVESTMENT MANAGEMENT INDUSTRY REVIEW ~ 2011

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