UK/US - The Bank of New York Mellon will acquire Insight Investment Management from Lloyds Banking Group for £235m (US$387.2m) and aims to make the UK-focused firm a more international player.
BNY Mellon will acquire approximately £80bn of assets from Insight's external fund management operations as Lloyds moves to restructure its asset management business.
Lloyds said it intends to transfer the investment management of the funds sourced from the its Halifax and Bank of Scotland bancassurance businesses, the Bank of Scotland wealth management operation and the Clerical Medical intermediary franchise from Insight to Scottish Widows Investment Partners (SWIP).
The Insight deal comprises of £200m in cash and an equity consideration of £35m. It is expected to complete in the final quarter of this year.
BNY Mellon Asset Management vice chairman Jon Little told Global Pensions BNY was particularly drawn to the firm's capabilities in liability driven investing (LDI). Between 60% and 65% of the firm's assets under management come from the LDI business, said Little, with the rest in traditional fixed income and absolute return-based fixed income strategies.
BNY Mellon Asset Management president and chief executive Ronald O'Hanley said: "Two equity downturns in 10 years and rapidly growing liabilities have left many retirement plans at a crisis level and have created an urgent need to overhaul many aspects of the current funding system."
Little said BNY plans to market Insight's capabilities in LDI in the US in the next three years. But a heavy push won't come for at least another year, while Insight completes transactions with existing clients in the UK.
The bulk of Insight's client base is in the UK, but Little expects non-UK business to eventually become "a pretty significant portion".
BNY Mellon owns a series of independent boutiques that are largely autonomous from the parent company.
Little said there won't be any personnel changes after the acquisition is complete.
With this acquisition, BNY Mellon will have more than $1trn in assets under management.
SWIP, meanwhile, will see its assets grow by £42bn following Lloyds strategic review.
It said the move would make SWIP its "centre of excellence" for asset management activity - and increase SWIP's assets under management from £83bn to around £125bn.
Lloyds said bringing together the group's asset management business under SWIP would provide "significant scale benefits".
SWIP managing director Dean Buckley said: "Looking ahead we expect to increase professional resources to reflect the enlarged scale of the business and to further develop our market leading capabilities."
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