US - Morgan Stanley will sell its retail business, including Van Kampen Investments, to Invesco for $1.5bn as the firm increases its focus on the institutional market.
Invesco will take on some US$119bn in assets once the deal closes in mid-2010, including Morgan Stanley's equity management business in Japan. Morgan Stanley Investment Management (MSIM) will keep the firm's Japanese fixed income business.
As part of the deal, Morgan Stanley will retain a 9.4% share in Invesco.
The restructured MSIM will have $267bn in assets under management and consist of a long-only institutional business, a liquidity unit, and a merchant banking business. MSIM will also tout real estate, private equity and infrastructure units.
Officials at MSIM are putting their energy into a business that took a beating during recent quarters.
After weak second quarter returns, Morgan Stanley chief executive John Mack said officials were "taking steps to deliver better results".
The asset management business posted a pre-tax loss during the second quarter of $239m, down from a loss of $232m the previous year. Assets under management or supervision had also shrunk to $361bn, down nearly 38% from a year earlier. The firm will announce its third quarter results tomorrow.
MSIM co-head Stu Bohart said: "We are refocusing our efforts towards greater profitability from a solid foundation, building on the strength and momentum already achieved in key businesses. We continue to see strong long-term performance in many of our actively managed strategies across the 1-year, 3-year, 5-year and 10-year time periods."
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