BoI buys US asset management outfit

BANK OF IRELAND began repairing its dented asset management business yesterday by spending $184 million (€153m) to take control of a specialist American fund manager.

The bank will take a 72% stake in Guggenheim Alternative Asset Management, a New York-based business, whose clients include institutional investors.

The business was previously owned by Guggenheim Partners, a high-profile financial services firm that was set up by the billionaire family of the same name.

The bank will buy out the remaining 28% of the company, which is split between Guggenheim Partners and management, over the next seven years.

Guggenheim Alternative has assets of around $2.8 billion (€2.36bn) and makes annual profits of around $25m (€21m).

It specialises in managing funds made up of hedge funds, which are niche, highly-leveraged investment instruments. The funds trade in commodities such as oil and gold, shares, currencies and derivatives.

Bank of Ireland chief executive Brian Goggin said the deal was the latest stage in the bank’s plan to improve its international distribution and provide a better range of investment options to clients.

“The acquisition ... will provide us with products and expertise in the alternative investment sector, which is an increasingly important segment of the investment market,” said Mr Goggin.

Guggenheim Alternative was set up three years ago to take advantage of an explosion in the market for alternative investments, and employs 35 people.

It is the bank’s second major acquisition in the US following the $200m (€168.7m) takeover of Iridian Asset Management in 2002.

The latest move comes in the wake of a collapse in the bank’s core US asset management business. Bank of Ireland Asset Management has leaked clients as funds under management on behalf of north American clients slumped from €23bn to €6.6bn over the 18 months to September.