Reuters reports that HighMark Funds, the fund family owned by Union Bank (formerly Union Bank of California), will sell its money market mutual fund assets to Reich & Tang. The story, entitled, "Exclusive: Nationwide, Reich & Tang to buy HighMark funds - sources," says, "Columbus, Ohio-based Nationwide Financial and New York-based Reich & Tang are buying UnionBanCal Corp's mutual fund business, three sources told Reuters on Tuesday. San Francisco-based UnionBanCal is expected to announce the sale of its HighMark Funds to the two parties in the next few days, said two of the sources, who wished to remain anonymous because they are not permitted to speak to the media." (See Reich & Tang's press release, "Reich & Tang Acquires HighMark Funds' Money Market Mutual Fund Business," here.)
Reich & Tang's Wednesday release says, "Reich & Tang today announced that it has entered into an agreement to acquire five money market funds from HighMark Capital Management, Inc., a wholly-owned subsidiary of Union Bank, N.A. The deal, which represents more than $4 billion in shareholder assets, has been approved by each company's Board of Trustees and is expected to close by July 2013."
It adds, "New York-based Reich & Tang is a cash management and liquidity specialist servicing broker-dealer, bank, and institutional markets, and is the third longest running money market mutual fund manager in the world. Reich & Tang currently supervises nearly $30 billion across money market mutual funds, FDIC insured programs, and separately managed account portfolios. Reich & Tang is a subsidiary of Natixis Global Asset Management, S.A., one of the largest asset managers in the world with approximately $779 billion in assets under management."
Reich & Tang is currently the 28th largest manager of money funds with $7.9 billion while HighMark is currently the 34th largest (out of 76) with $4.2 billion, according to Crane Data's Money Fund Intelligence XLS (as of 2/28/13). Union Bank is owned by the Bank of Tokyo Mitsubishi UFJ.
The Reuters story explains, "UnionBanCal is selling its five money market funds, which have $4.2 billion in assets, to Reich & Tang, a New York-based subsidiary of Natixis Global Asset Management, S.A., the two sources said. It could not be determined how much Nationwide [who is buying HighMark's stock and bond funds] and Reich & Tang are paying for the funds."
It adds, "Given how difficult it is for firms to make money offering money market funds in the current low interest rate environment, along with the potential for regulatory reform of money market funds, it makes sense that Highmark is getting out of the business, said Jeff Tjornehoj, an analyst at Lipper."
The deal would be the first substantial money fund transaction of 2013 and the latest change since a series of municipal money fund liquidations in late 2012. See Crane Data's previous "News" articles on mergers and liquidations -- "More Fund Liquidations: HSBC, Dreyfus T-E; More FSOC MMF Comments (1/3/13), "More State Tax Exempt MMFs Liquidate: BlackRock's BIF AZ, FL, NC (12/26/12)," "Sterling Capital Liquidates MMFs (12/18/12)," and "Consolidation Continues: Pyxis, Some Dreyfus Muni MFs Liquidating."
Reich & Tang previously acquired Value Line U.S. Government Money Market Fund in October 2012. (We wrote about this in our Oct. 25, 2012, News). Their press release said, "Reich & Tang ... announced that it has acquired the Value Line U.S. Government Money Market Fund. The transaction was completed on October 19, 2012." The previous release quoted Michael Lydon, Chief Executive Officer, "We are pleased to have completed a deal with Value Line that accomplishes its primary goal of adding shareholder value. The deal also underscores Reich & Tang's commitment to growing its money fund business and diversifying its shareholder base."
