As part of its efforts to strengthen its global presence, Federated Investors Inc. (FII - Analyst Report) has entered into an agreement with London-based Bury Street Capital to expand its European distribution. Mainly, Bury Street Capital will emphasize on the distribution of current and new Federated UCITS (Undertakings for Collective Investment in Transferable Securities) products that are focused on income strategies.
As per the agreement terms, Bury Street Capital, whose clientele includes top rated global pension funds and wealth managers across Europe, will engage itself in marketing and distributing three fixed-income strategies with new share classes, which are anticipated to be launched in the fourth quarter, subject to the nod from the Central Bank of Ireland.
The funds include Federated Emerging Markets Global Debt Fund, Federated U.S. Total Return Bond Fund and Federated High Income Advantage Fund. Moreover, the marketing and distribution of the Federated Strategic Value Equity Fund, a U.S. dollar-denominated dividend UCITS fund, will also be managed by Buy Street Capital.
This particular tie up with Buy Street Capital will help Federated in complementing and broadening its existing distribution platform in Europe. Federated’s operations in Europe dates back to over 20 years.
With the assistance of the Pan-European distribution experience of Bury Street Capital, the agreement offers opportunities to explore new markets for Federated and escalates its UCITS managed assets.
As a matter of fact, with European Union’s pension system shifting to defined-contribution plans from the defined-benefit one, the UCITS market is projected to substantially get bigger, thus offering Federated an opportunity to bolster its top line.
One of the largest investment managers in U.S., Federated, which manages $355.9 billion in assets as of June 30, 2012, has the potential for significant growth in the long run, given its fairly liquid balance sheet and a diversified asset as well as product mix.
It continues to look for more opportunities to crack profitable deals and is on track to expand globally. In September 2012, Federated acquired $4.4 billion worth money market assets from Fifth Third Asset Management Inc. (FTAM), the asset management subsidiary of Fifth Third Bancorp (FITB).
Notably, in April 2012, Federated expanded its operations by acquiring London-based Prime Rate Capital Management, LLP from Matrix Group Limited, a provider of institutional liquidity and fixed-income products. The acquisition solidified Federated's European presence with U.K.-domiciled UCITS products.
Moreover, investors’ increased demand for the company’s wide range of income-oriented products will help it to boost profitability despite persistent regulatory pressures and slow global economic growth.
Federated currently retains its Zacks #3 Rank, which translates into a short-term Hold rating.