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Federated (FII) to Acquire $1.1B Money Market Assets

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Pursuing expansion moves, Federated Investors, Inc. (FII - Free Report) inked a deal with Huntington Asset Advisors, Inc. and The Huntington National Bank, subsidiaries of Huntington Bancshares Incorporated (HBAN - Free Report) to acquire around $1.1 billion in money market fund assets of Huntington Asset Advisors. These assets relate to Huntington Asset Advisors’ management of two money market funds. The deal is likely to be closed in the fourth quarter of 2015.

Financial terms of the deal remained undisclosed.  As per the deal, the assets will be transitioned to two Federated money market funds with similar investment objectives and strategies. Prime money market assets of around $236 million will be reorganized from the Huntington Money Market Fund into Federated Prime Cash Obligations Fund, and about $870 million will be reorganized from the Huntington U.S. Treasury Money Market Fund into Federated Treasury Obligations Fund.

In order to comply with the SEC’s 2014 rules related to money market funds, in June 2015, Federated announced plans to restructure its product line and merge certain funds. The Pittsburg-based investment manager expects completion of product changes before the end of this year. At the same time, it remains focused on expanding its money market assets. As of Jun 30, 2015, money market assets were $242 billion.

Notably, in July 2015, Federated announced that it has completed the transition of nearly $4 billion in shareholder accounts from six money market funds of Reich & Tang Asset Management, LLC. Additionally, in June, Federated completed the acquisition of tax-free money market assets worth $91 million from Touchstone Advisors, Inc.

We remain encouraged by Federated’s strategic deals. Under the prevailing pressure in money market funds owing to the lingering low interest-rate environment and stringent regulations, acquiring money market assets depicts buoyancy of the company in the money market business.

Federated currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the finance space include Lazard Ltd. (LAZ - Free Report) and Monroe Capital Corporation (MRCC - Free Report) . Both the stocks sport a Zacks Rank #2 (Buy).

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