Principal makes $100 million investment
Principal Financial Group Inc.’s U.S. asset management division said it plans to spend about $100 million to buy a majority interest in Los Angeles-based money manager MW Post Advisory Group.
The acquisition, expected to be completed by early next year, will give Principal Global Investors expertise in products related to high-yield and distressed debt securities, which are also known as junk bonds. As part of the agreement, Principal will acquire a 68 percent stake in MW Post, including Metropolitan West Financial Inc.’s entire stake in the firm.
The acquisition marks the biggest for Principal Global since Jim McCaughan, a former president of Oppenheimer Capital, became chief executive in December. Executives at Principal Global have been searching since last year for ways to build capabilities in and exposure to the high-yield bond market, according to Tina Marchetti, a Principal spokeswoman.
“An acquisition was the fastest, cleanest and best way to do it,” Marchetti said. “We were looking at our capabilities and where the market was going and decided we had to fill a need in high yield. High yield is a critical component of a well-balanced portfolio and is becoming increasingly so.”
MW Post, which will be renamed Post Advisory Group after the transaction is completed, has about $3.4 billion in assets under management. Principal Global manages about $108 billion in assets, the bulk of the total amount of money under the control of Principal Financial, the nation’s largest manager of 401(k) retirement accounts.
Through the transaction, MW Post, founded by Larry Post in 1992, gains access to Principal’s greater resources and its global network of salespeople and money managers. MW Post’s organizational structure and leadership will remain unchanged.