Piper Jaffray Picks up Chicago Asset Manager

Piper Jaffray Companies has announced what it described as a “significant expansion” of its asset management business.

According to a press release, the company has signed a definitive agreement to purchase Chicago-based Advisory Research, Inc., an asset management firm with approximately $5.5 billion in assets under management, which are mainly focused in equity strategies.  

Advisory Research has 42 employees, including 19 investment professionals, and FAMCO has 52 employees, including 23 investment professionals. Locations will remain in Chicago and St. Louis. 

The transaction, expected to close in the first quarter of 2010 and is subject to customary regulatory approvals and client consents, is valued at $218 million, payable at closing, composed of $178 million in cash and $40 million of restricted stock. Employee owners will receive approximately 40% of consideration in restricted stock, according to the announcement. 

Assuming the transaction occurred on Sept. 30, 2009, asset management would have comprised approximately 12% of Piper Jaffray total net revenues and 24% of pre-tax operating income for the nine months ending Sept. 30, 2009.  

Brien O’Brien, chief executive officer of Advisory Research, will join the Piper Jaffray senior leadership team and report to Andrew Duff, chairman and CEO of Piper Jaffray. O’Brien will continue to lead Advisory Research and Wiley Angell, CEO of FAMCO, the current Piper Jaffray asset management business, will continue to lead that organization. O’Brien will provide leadership to the overall asset management business, according to the firm. 

“Expanding our asset management business furthers our strategy of building a diversified investment bank and improving our overall pre-tax margin and return on shareholders’ equity,” said Duff in a press release.  “Advisory Research and FAMCO have complementary capabilities and position us to better meet client needs in the long term. With the addition of Advisory Research, asset management achieves sufficient scale to support further organic development.”