Federated Investors Looks Overseas

Federated Investors Inc. (FII - Analyst Report) is on a lookout for additional expansion after completion of last year’s acquisition, its main focus being international growth. 

In 2008, Federated acquired Clover Capital Management Inc. and the assets of the two Prudent Bear Funds and has almost completed the successful integration of the same. Currently, the company aims at expanding distribution for its products, though it is not actively seeking acquisitions targeted to a specific investment expertise, the management does remain open to such deals as well. 

Federated reported third quarter 2009 net income applicable to common shareholders of $57.0 million or 56 cents per share compared to a net income of $53.3 million or 52 cents per share in the prior quarter and a net income of $56.2 million or 52 cents per share in the prior-year quarter. Results were ahead of the Zacks Consensus Estimate of 52 cents due to lower-than-expected expenses offsetting lower revenues. 

Total revenue decreased 4.3% year-over-year to $293.6 billion primarily due to $36.5 million in voluntary fee waivers related to certain money market funds in order to maintain positive or zero net yields. Falling yields forced Federated and other money fund managers to waive fees and keep clients invested in their products. The company witnessed positive flows into bond and equity funds. 

Federated continues to evaluate multiple acquisition opportunities to add to the existing scale, including a money market consolidation deal. It is also contemplating deals for organic growth outside the U.S. but has not evaluated the timing of the same. Federated already has businesses in Germany and London.

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