Northwestern Mutual mulls sale of Russell Investments
The corporate parent of Russell Investments is considering cashing out of the Seattle asset-management firm. It says Russell’s strong growth makes it a good time to consider a divestment.
Seattle Times business reporter
The corporate parent of Russell Investments said the Seattle-based asset-management firm could be put up for sale.
Milwaukee-based financial company Northwestern Mutual said in a statement late Monday that it is “exploring strategic alternatives, including a possible sale,” for its majority stake in Russell Investments.
The statement confirms rumors that surfaced this month, as Reuters reported a sale was being considered. At the time, both Russell and Northwestern declined to comment.
Russell employs about 1,800, roughly half in Seattle and the rest in 20 offices worldwide.
Northwestern indicated the strong growth seen by Russell made it a good time to ponder ways of cashing out its investment. But a sale or some other change “could take months,” the company said.
Russell had nearly $257 billion in assets under management at the end of 2013, a $52 billion bump from the end of 2011, a Russell spokesman said. That’s a 25 percent increase — which nevertheless trails the performance of the stock market.
The Standard & Poor’s 500 index grew by nearly 47 percent in the same period.
Mergers and acquisitions of asset-management firms decreased in recent years, as high market volatility affected valuations. The gradual improvement of the global economy could enable buyers and sellers to more readily agree on an attractive price for both parties.
Moreover, the asset-management sector is overdue for consolidation, as strict regulations have made costs increase, according to a PwC report.
Owning Russell has made Northwestern a sizable player among asset managers: a P&I/Towers Watson report ranked it as the 54th largest asset-management firm worldwide, with $322.5 billion under stewardship at the end of 2012.
Northwestern also made a tidy profit from the building housing Russell’s Seattle headquarters, which it sold for $480 million in April 2012.
It had bought the 42-story building, formerly the site of Washington Mutual’s headquarters, less than three years before — for $115 million.
Earlier this month, Russell said it was making major changes in the way it allocates assets across several funds to increase its exposure to equities and higher-yield bonds. The move came as the firm seeks to boost returns amid forecasts of modest global growth this year.
A Russell spokesman said it’s “business as usual” at the firm in the wake of the announcement of a possible sale.
Russell Investments was founded in Tacoma in 1936. Northwestern bought it in 1999, but Russell has been run autonomously since then. In 2010, Russell moved its headquarters to Seattle.
Ángel González; 206-464-2250 or email@example.com. On Twitter: @gonzalezseattle