UK - The Bank of New York Mellon is boosting its UK institutional LDI and fixed income business by £75bn through the purchase of Insight Investment Management from Lloyds Banking Group.
The acquisition will cost £235m, of which at least £200m is payable in cash, and the balance in shares.
Insight's assets under management are around £80bn, net of identified internal assets that will be retained by Lloyds.
BNY Mellon says it has no plans to integrate Insight with Newton Investment Management, its existing UK fund manager, and that both management team will stay in place.
"Insight specialises in LDI, fixed income and absolute return strategies, and is a relatively low-fee business, as it tends to manage entire pension schemes," says Jon Little, vice chairman of BNY Mellon Asset Management.
"Newton runs global equity mandates against benchmarks on a conventional basis," he says. "So they are complementary brands. BNY Mellon has a reputation for buying companies and leaving them alone."
According to the forthcoming Investment & Pensions Europe survey of the UK institutional marketplace, Insight managed total assets of £73.2bn for UK institutional clients. The total UK institutional assets managed by Newton came to £15.1bn, according to the survey.
Little says the acquisition will allow BNY Mellon to further use its UK business as a bridgehead into the European market, although it has been active on the Continent for some years.
He says: "Insight are LDI specialists in the UK, and the UK is unfortunately the leading LDI market at present, as pension funds move towards lower-risk strategies funds, characterised by DB scheme closures and fuelled by increasingly stringent regulatory demands and accountancy requirements for pension funds worldwide."
Little says that in countries such as the Netherlands and Germany, there are many pension schemes, as well as insurance companies with guaranteed cash flow requirements, using an LDI approach. The strategy is also taking off in the US, Japan and Australia.
BNY Mellon is unconcerned about the prospect that analysts will automatically place both Newton and Insight on a rating watch or even downgrade their ratings.
"During the six months it has been for sale, Insight has continued to attract new business," says Little.
The other major players in the LDI market are BGI, which is being acquired by BlackRock, and Legal & General Investments.