More Private Equity Firms Keen to Buy Asset Managers

Nuveen Investments’ agreement to be bought by a private equity group led by Madison Deerborn Partners, may indicate more deals in the future between the two non-traditional partners, according to The Wall Street Journal.

“All the very large private equity funds are very interested in this sector,” said Darlene DeRemer of Grail Partners. Recently, the Carlyle Group expressed interest in investing in the sector, as well as other chief private equity firms rumored to be looking for targets.

The deal is unique, as private equity firms usually acquire struggling companies, while Nuveen is a solid company undergoing a growth spurt particularly due to its closed-end mutual funds.

The $5.75 billion deal is subject to shareholder approval and is expected to close by the end of this year. Nuveen stated its board of directors, through investment banker Goldman Sachs, will accept competing proposals through July 19.

Tim Hurd, managing director at Madison, said the company has been looking to acquire asset management companies for the past few years because of their high profit margins, low capital expenditures and overall high return on capital. Nuveen “is our horse” to bet on this sector, he said.

He stated that he hopes to help Nuveen extend its product line by funding acquisitions of other smaller companies, a means of growth for Nuveen in the past. Madison is not planning any cost cutting or restructuring.

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