(Bloomberg News) Guggenheim Partners LLC, the U.S. firm seeking to acquire Deutsche Bank AG's asset management businesses, would quintuple in size with the deal, enabling it to better compete against the biggest global investors.
Guggenheim, with $125 billion (93 billion euros) under management, would surpass $660 billion if it buys units of Frankfurt-based Deutsche Bank with almost 400 billion euros ($539 billion) of assets. At that size Guggenheim would be comparable to managers Legg Mason Inc. and Franklin Resources Inc., which had $631 billion and $704 billion as of Jan. 31.
Deutsche Bank said yesterday it is holding exclusive talks to sell its asset management divisions to Guggenheim. Guggenheim, which is based in New York and Chicago, had been competing with firms such as Macquarie Group Ltd. of Australia to buy the units, according to people familiar with the process. Pulling off such a major purchase and integrating the pieces wouldn't be easy, said Michael Rosen, chief investment officer of Angeles Investment Advisors LLC.
"There haven't been many deals on this scale that have been successful," Rosen said in a telephone interview from Santa Monica, California. "Instilling and maintaining a single investment culture is very tricky."
The units for sale include DB Advisors, an institutional money-management unit with 163 billion euros in client assets; Deutsche Insurance Asset Management, which oversees 142 billion euros; the RREEF unit, which specializes in real estate and infrastructure investments and manages 45 billion euros; and DWS, with about 42 billion euros in the Americas.
Guggenheim Partners is connected to the family of Meyer Guggenheim, a tailor of Swiss-Jewish background who came to the U.S. in the 1840s and made a fortune in mining and smelting. The Solomon R. Guggenheim Museum in Manhattan is named for one of his sons, a philanthropist.
In 2000, Peter Lawson-Johnston Sr., a great-grandson of Meyer Guggenheim, used family money to start the company, which has evolved into a financial services firm that manages money and provides investment banking services. The firm is led by Chief Executive Officer Mark Walter. Alan Schwartz, former CEO of Bear Stearns, is executive chairman.
Guggenheim Capital LLC, the majority owner of Guggenheim Partners, has raised money from outside investors including Sammons Enterprises Inc., a Dallas-based company, according to Sammons' website. The closely held Sammons, which has interests in industrial products, insurance and travel, doesn't disclose the size of its investment in Guggenheim, Theresa Badylak, a spokeswoman, said in a telephone interview.
Series Of Acquisitions
K1 Ventures Ltd., based in Singapore, agreed in June to invest $100 million in preferred stock and warrants of Guggenheim Capital, Guggenheim said at the time.