UniCredit, the Italian bank that owns Pioneer Investments, is favourite to buy US fund manager Putnam Investments, according to bankers close to the deal.
Putnam, which has $180bn in assets, is valued at about $3bn. Sources said the UK's Amvescap and Canada's CI Financial are also finalists in the bidding. Financial News reported in September that Putnam's parent, Marsh & McLennan, had asked Goldman Sachs to solicit offers for the business. Sources said Pioneer is likely to win because of its ability to make an all-cash offer but did not rule out a bid from Amvescap, which is likely to include an equity component. But analysts said Amvescap, which has a market capitalisation of $9.3bn, would find a large-scale acquisition difficult. Amvescap, which has made two acquisitions this year, is battling against asset outflows but its performance has improved. Last week, it reported $700m in net outflows in the third quarter. UniCredit's Pioneer Investments had $275bn in assets under management at the end of August. But only €58bn of that is managed by the US business in Boston, Massachusetts. Analysts said Pioneer needs to be bigger to compete in the US mutual fund market. UniCredit bought Pioneer, one of the oldest US mutual funds, in 2000. Pioneer bought institutional fixed income manager Vanderbilt Capital Advisors, which has $13bn under management, in April. It has been integrating Activist and Capital Invest, fund management companies it acquired when UniCredit bought HVB last year. Putnam is emerging from years of underperformance and investors have withdrawn about $100bn from its mutual funds since 2001, according to consultancy Financial Research Corporation. Michael Cherkasky, Marsh & McLennan's president and chief executive, said last month he had received "repeated inquiries from parties interested in either acquiring or partnering with Putnam". But Marsh has come under pressure from shareholders who are impatient with its slow turnround, while its poor performance has made it an acquisition target. Amvescap declined to comment. UniCredit and Marsh & McLennan did not return calls.
