In the latest of a series of acquisitions sweeping the managed account industry, BNP Paribas, the giant French bank, is buying FundQuest Inc., the Boston-based turnkey asset management provider with about $10 billion in assets under management and administration. The purchase price was not disclosed.
BNP Paribas said it plans to use the FundQuest brand for wealth management solutions in both the U.S. and Europe. FundQuest will be joined with Cortal Consors Fund Management, a BNP Paribas subsidiary with $18 billion in assets.
Founded in 1993, FundQuest operates Web-based managed account platforms for more than 50 financial institutions and provides mutual fund wrap accounts, fee-based brokerage, and consultant wrap programs. FundQuest's clients include 7 of the top 15 banks and broker/dealers of top insurance companies including John Hancock and Lincoln Financial. Ron Mastrogiovanni, a FundQuest executive vice president, notes that many recent TAMP industry mergers have been driven by rising spending on new technology at a time of shrinking asset management fees. But "in our case, we weren't really looking for a partner," he says. "BNP was looking for investments in the U.S., and we started to talk."
FundQuest is known both for its wide range of investment products and its policy of permitting clients to use their existing clearing firms or custodians, if they wish. Mastrogivanni says that policy will continue under BNP Paribas. Indeed, Tina Wilkinson, executive director of BNP Paribas Asset Management in Luxembourg, says that FundQuest's open architecture will be the basis of a push by the bank late this year or early in 2006 into the European separate account business. "We're very excited," Wilkinson says.
Gilles Glicenstein, CEO of BNP Paribas Asset Management, the subsidiary which is purchasing FundQuest, said in a prepared statement that the Boston firm "is an integral part of the strategic vision to create a global wealth management platform based on best-in-class manager selection and superior technology." Added FundQuest CEO Robert Del Col: "The potential upside for FundQuest is enormous in our core business as well as in the emerging areas of retirement income planning and bank trust wealth management services". Mastrogiovanni notes that in the retirement income planning area, FundQuest will soon introduce a new line of products that will put together packages of mutual and exchange traded funds, individual securities, and separate accounts focused on "folks in the distribution phase" of their financial lives.
BNP Paribas, which announced the acquisition June 28, said it expects to close the deal in August.