Federated Investors Inc. will acquire components of PNC Capital Advisors LLC’s investment-management business, including approximately $9 billion in liquidity assets, $4.2 billion in equity assets and $700 million in fixed-income assets. The move allows PNC to focus on delivering value-added advice and solutions for its wealth management and institutional clients, leveraging bespoke investment solutions and a strong open architecture platform.
The transaction is expected to close in the fourth quarter of 2019. Federated will pay PNC an estimated total purchase price of $52 million when the transaction is completed.
The proposed transaction includes the reorganization of PNC’s family of liquidity, equity and fixed-income mutual funds into corresponding Federated mutual funds; the acquisition of a portion of PNC’s separate account and separately managed account business; and the transition of a six-person international equity management team, based in Cleveland, from PNC to Federated.
Approximately $9 billion in assets from three PNC government and treasury money market funds will be transitioned through mutual fund reorganizations. Further, approximately $2.7 billion in equity mutual fund assets and $700 million in fixed-income mutual fund assets would be reorganized from an additional 15 PNC funds into 10 existing and three newly created Federated funds. The existing Federated mutual funds have comparable investment strategies.
Federated expects to transition three of PNC’s fundamentally driven international equity mutual funds — the I, A and C share classes of the $1.6 billion PNC International Equity Fund and the I and A share classes of the $5.6 million PNC International Growth Fund — into new Federated shell portfolios.
“PNC’s institutional asset management business will now be focused on its core strength: providing comprehensive outsourced chief investment officer services and custom investment solutions to help our clients run their businesses better,” PNC Financial Services Group’s head of Corporate & Institutional Banking and the Asset Management Group Michael P. Lyons said, in a statement.
Post-closing, PNC Capital Advisors will manage approximately $21 billion of custom liquidity and fixed-income solutions to address the needs of PNC’s corporate and institutional clients. The employees of PNC’s liquidity and taxable fixed-income teams will remain with PCA, focused on managing separate accounts. PNC’s Institutional Advisory Business will continue to manage $26 billion of OCIO assets on behalf of corporate and institutional clients.
