Private equity expected to bid for Russell Investments

Northwestern Mutual Life has hired Goldman Sachs to run the auction of Russell, three sources told sister news service peHUB.

The sale is expected to draw interest from strategics such as BlackRock and Franklin Templeton. Large Canadian and Australian banks such as RBC, ANZ Banking and National Australia may also be interested, the sources said.

On the private equity side, the usual bidders for asset management firms will probably take a look at Russell. These include Hellman & Friedman, TA Associates, KKR, Blackstone, Advent International and Lightyear Capital, sources said. Guggenheim Partners, which sold Claymore Investments to BlackRock in 2012, may also be in the mix, one private equity executive said.

Sister news service Reuters reported on Jan 7 that Northwestern was exploring a sale of Russell, which has $247 billion in assets under management.

A sale has been expected since 2010 when Northwestern decided that the unit, which runs the Russell indices, was no longer a core asset. Russell could fetch $2 billion to $2.5 billion, sources told peHUB.

Northwestern Mutual bought Russell in 1998 in a deal that was estimated at $1.2 billion. In 2009, Russell moved to Seattle and also launched its own line of exchange-traded funds (ETFs).

The asset manager sold its private equity manager Pantheon Ventures to Affiliated Managers Group for $775 million in 2010. Two years later, Russell closed its 25 ETFs because they failed to garner significant assets, Reuters reported.

Officials for Northwestern and Goldman declined comment. Russell could not be reached for comment.

Luisa Beltran is a senior reporter for peHUB