Nuveen Investments Inc., the asset manager owned by
Madison Dearborn Partners LLC, agreed to buy the stock and bond funds of U.S. Bancorp’s FAF Advisors unit for $80 million in cash and a 9.5 percent stake in Nuveen.
Nuveen will get $25 billion in investments from FAF Advisors, which runs the First American family of mutual funds, the Chicago-based company said today in a statement. Nuveen will manage $175 billion when the transaction is completed this year. U.S. Bancorp will hold on to about $62 billion in assets in money funds.
Nuveen, taken private in 2007 by Chicago-based Madison Dearborn, has expanded its stock and bond units with acquisitions. Nuveen in 2008 bought growth-stock manager Winslow Capital Management, which followed purchases of Santa Barbara Asset Management and Symphony Asset Management earlier in the decade.
Tom Schreier, chief executive officer of Minneapolis-based FAF Advisors, will be vice chairman of wealth management at Nuveen Investments. Bill Huffman, co-head of Nuveen Asset Management, a municipal bond unit that oversees about $75 billion, will be president of the combined businesses.
Closed-End Funds
Nuveen is the largest manager of closed-end funds. It also oversees municipal bonds and stocks, and owns NWQ Investment Management and Tradewinds Global Investors.
Standard & Poor’s Ratings Services said today’s agreement with Minneapolis-based U.S. Bancorp doesn’t change the long-term corporate credit rating on Nuveen of B-, or six levels below investment grade, with a stable outlook.
U.S. Bancorp, the nation’s fifth-biggest bank, didn’t disclose a value for the Nuveen stake it’s receiving. Nuveen’s shareholder equity at the end of December was $969 million, according to Bloomberg data.
FAF Advisors is one of five parts of U.S. Bancorp’s wealth- management segment, which contributed about 17 percent of the bank’s net income in 2009, according to company reports and Bloomberg data.
“We determined that we did not have the scale and distribution necessary to appropriately grow the long-term asset-management business,” U.S. Bancorp spokeswoman Teri Charest wrote in an e-mail. “The opportunity to sell the business to Nuveen while maintaining an equity stake was an attractive alternative.”
The transaction is too small to be material to U.S. Bancorp’s financial statements or to its measurements of capital for bank regulators, according to Charest.
U.S. Bancorp added 2 cents to $23.99 at 3:01 p.m. in New York Stock Exchange composite trading. The stock has gained more than 6.5 percent this year.
