Morgan Stanley (MS) is reportedly planning to sell its stake in London-based Lansdowne Partners, LLP. Presently, the company holds 19% stake in the hedge fund manager.
Notably, under the Volcker rule, the company had been facing regulatory pressures to simplify its business and reduce ownership in risky assets. Consequently, Morgan Stanley is said to have taken the decision to sell its stake in the above-mentioned asset. Moreover, though not a part of the company’s long-term strategy, Greg Fleming, president of Morgan Stanley Investment Management, back in Feb 2014, had announced plans to wind down its hedge fund investments.
Lansdowne Partners holds assets under management worth $17.5 billion, and Morgan Stanley could earn several hundred million dollars from the stake sale. Affiliated Managers Group Inc. (AMG), Dyal Capital and Foundation Capital Partners feature in the potential buyers’ list.
The company had acquired stake in Lansdowne Partners in 2006, as part of its strategy to diversify its asset management franchise and form a leading alternative business. However, given the poor performance of the hedge fund industry in 2014, Morgan Stanley’s decision to sell its stake in the hedge fund manager seems justified.
As per a data tracker eVestment, the average hedge fund returned 2.5% in the year. This comes much below the Dow Jones industrial average, which closed the year at 7.5% gain, and S&P 500, which surged 11.4%.
Apparently, the company is also considering the sale of its stake in the New York-based Avenue Capital Group. Moreover, JPMorgan Chase & Co. (JPM) is reportedly interested in selling its stake in Highbridge Capital Management LLC’s hedge fund and private equity arms.
Among other companies in the industry, Deutsche Bank AG (DB) has agreed to sell 17.5% stake in Arrowgrass Capital Partners LLP to Foundation Capital; while Lehman Brothers Holding Inc. is in talks to sell 20% stake in the D.E Shaw Group.
Currently, Morgan Stanley carries a Zacks Rank #3 (Hold). GAIN Capital Holdings, Inc. (GCAP) is a better-ranked investment broker, sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment