(Bloomberg News) TCW Group Inc., the $127 billion asset manager founded by Robert Day in 1971, will go back to being a stand-alone firm after more than a decade under ownership by Societe Generale SA.
Carlyle Group LP agreed yesterday to buy Los Angeles-based TCW in a deal that will give TCW's management and employees a 40 percent stake. The transaction with Carlyle values TCW at $700 million to $800 million, according to two people familiar with the agreement, who asked not to be identified because the information wasn't disclosed publicly.
"From the standpoint of TCW, the decade of Societe Generale's ownership really wasn't a helpful thing," said Geoffrey Bobroff, a mutual-fund consultant in East Greenwich, Rhode Island. "When you have institutional ownership, there are expectations that prompt you to run the business differently and it isn't in the position to create incentives."
The deal ends 11 years under the French bank's ownership, during which the firm failed to keep pace with Bill Gross's Pacific Investment Management Co. and suffered withdrawals and the departures of more than 40 employees when it fired top-ranked bond-fund manager Jeffrey Gundlach in December of 2009. Societe Generale, which bought TCW in 2001 for about $880 million and then added to its stake, took a 200 million-euro ($246 million) writedown in the second quarter and said it may have to make more adjustments when the deal closes.
The bank is selling assets as lenders across Europe seek to shore up their balance sheet amid the region's sovereign-debt crisis and tighter capital rules.
Since being taken over by Societe Generale in 2001, TCW's assets rose from $80 billion to a peak of $147 billion in 2007 before declining. By comparison, Pimco, which was co-founded by Gross in the same year that TCW was started and is now owned by Germany's Allianz SE, has grown to $1.8 trillion in assets and manages the world's largest mutual fund, the $263 billion Pimco Total Return bond fund. Gundlach, who started DoubleLine Capital LP after being ousted by TCW at the end of 2009, has since gathered $40 billion in assets, almost a third of TCW's total. The $30.1 billion DoubleLine Total Return Bond Fund has beaten 97 percent of peers in the past year.
The relationship between Gundlach and TCW started to sour with Societe Generale's acquisition, when Gundlach said his stake in the fund company fell, according to court transcripts. Gundlach's ouster cost the firm $566 million in damages, TCW said in court documents.
Gundlach, TCW's former chief investment officer, had offered to buy 51 percent of the business for about $350 million in September 2009, valuing the asset manager at about $700 million, according to court documents filed last year. He was dismissed by TCW about three months later.