Nuveen Investments to be Purchased by Private Equity Group

Nuveen Investments has agreed to be acquired by an investor group majority-led by Chicago-based Madison Dearborn Partners, LLC (MDP).
Nuveen, a provider of diversified investment services to institutional and high-net-worth investors, announced the $6.3 billion transaction. The company’s stockholders will receive $65 per share, a premium of 20% over the closing price of the shares on June 19, 2007.
On July 1, Nuveen’s president and a director since 1999, John Amboian will replace Timothy Schwertfeger as Chief Executive Officer. Schwertfeger will become the non-executive chairman of the Nuveen Investments corporate board and will remain the chairman of the Nuveen fund board.
“This transaction by MDP, with an anticipated equity participation by management, will provide Nuveen Investments the opportunity to accelerate our development of new investment capabilities, products and distribution channels, and help us attract and retain top industry talent,’ said Schwertfeger, in a news release. “We believe that we will be able to develop even further our institutional and high-net-worth presence, our mutual fund business and our structured product expertise. Our highest commitment remains to continually meet the needs of our institutional and individual clients as well as the consultants and financial advisors who serve them.’
The merger, which was approved by Nuveen’s Board of Directors, is expected to be completed by the end of the year but, under the agreement, Nuveen may solicit proposals from third parties through July 19, 2007, something it said its Board of Directors intends to do.

Open Architecture Revamps Fund Supply and Demand

Changing investor needs and the continuing shift to open architecture are changing relationships between asset management organizations and fund distribution platforms.
The 2007 Third-Party Distribution Research Study by Greenwich Associates asserts that a new group of professional buyers is developing at investment fund distribution platforms and these increasingly powerful buyers at organizations such as broker/dealers, bank trust departments, defined contribution recordkeepers, third-party administrators, and variable annuity insurance companies, are being given a variety of new tasks.
Those new tasks include:
  • identifying investor needs,
  • evaluating providers,
  • assembling effective investment manager menus, and
  • helping end investors choose the best managers.
“The end goal is to attract assets to the platform,” says Greenwich Associates consultant Lori Crosley, in a news release, “and the increased use of open architecture means platforms must take a smarter and more strategic approach to manager selection and thoughtful recommendation in order to create demand pull among investors in addition to supply push.”
Broker/dealers have been the most aggressive in adopting open architecture, according to the study. Only one in five broker/dealers participating limit the number of managers on their menus, compared to nearly 55% of registered investment advisers, 50% of defined contribution recordkeepers and 47% of annuity insurance companies.
Retirement Income
Asked to identify the most important investor-driven trends influencing their markets, Greenwich Associates said more than 20% of respondents pointed to the growing emphasis on retirement income and planning and almost a quarter cited related innovation in investment fund distribution products, like guaranteed living benefits.
“At a practical level, demands for new products and advice related to retirement planning and savings are altering the criteria by which these professionals evaluate and select managers for their platforms and recommend management products to their investors,” the release said.
When asked what steps they had taken to adapt to the growing interest in advice for retirement plan participants, platform decisionmakers said they are upgrading product offerings by designing packaged products that provide income and allow for achievement of individual retirement goals.
In particular, respondents noted the growing importance of products such as retirement income vehicles, asset allocation products and low-cost passive funds, such as exchange-traded funds (ETFs). Products like target-date maturity funds are gaining traction among investors as simple and relatively professional tools for investors to build and manage their retirement savings over the course of their careers.

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