To strengthen, grow, and diversify its financial services capabilities and expand its distribution, retirement and financial services provider TIAA-CREF will acquire Nuveen Investments in a $6.25 billion transaction, the firm announced in press release on Monday.
TIAA-CREF is acquiring Nuveen from an investor group led by Madison Dearborn Partners, a private equity investment firm.
The boards of directors at both TIAA-CREF and Nuveen each have unanimously approved the transaction, which is expected to be completed by the end of the year, subject to customary closing conditions, according to the press release.
Nuveen — which provides a wide-range of high-quality, specialized investment services to institutional and individual investors as well as consultants and financial advisors — managed approximately $221 billion as of December 31, 2013, according to the release.
The addition of Nuveen brings TIAA-CREF's total assets under management to approximately $800 billion, the release said. The firm provides retirement services in the academic, research, medical, and cultural fields.
Under the transaction, Nuveen will operate as a separate subsidiary within TIAA-CREF's asset management business, retaining its current multi-boutique business model and continuing to support its investment affiliates through scaled distribution, marketing and administrative services. John Amboian will remain the chief executive officer of Nuveen, and Nuveen's current leadership and key investment team will be unchanged.
Nuveen Investments is the parent company of Nuveen Asset Management LLC, which offers seven national, and 26 state specific municipal bond mutual funds, according to its website.
TIAA-CREF currently manages only the TIAA-CREF Tax-Exempt Bond Fund retail class under the ticker symbol TIXRX, according to a list of fixed-income mutual funds on its website.
Management at both companies believes the acquisition will allow the firms to enhance their existing platform of services, yet retain their respective qualities and practices for their customers.
"Nuveen and TIAA-CREF share similar values and the same high standards of service and we are excited about the opportunity to further serve our clients," Amboian said in the release.
Besides growth, the acquisition will also provide TIAA-CREF clients with access to new products and investment choices, including both traditional and alternative investments comprising a diversified range of assets, such as equities, taxable and tax-exempt fixed income and credit strategies, commodities, real estate and real assets, the release said.
"The acquisition of Nuveen can generate greater returns that will benefit our customers," Roger W. Ferguson Jr., president and chief executive officer of TIAA-CREF said in a statement. "This transaction reinforces our position as a leading diversified financial services organization with a broad mix of product offerings to serve clients today — and those in retirement for decades to come."
"Nuveen's strong distribution network will give us growth and scaled presence in several important channels through relationships built around experienced investment managers with strong track records," added Robert Leary, executive vice president, TIAA-CREF, and president, TIAA-CREF Asset Management.
As a result of the transaction, TIAA-CREF will now have two award-winning mutual fund complexes with $181 billion of aggregate assets under management.
TIAA-CREF was named by Lipper as the best overall large fund company for a second year in a row, an accolade Nuveen received in 2012.
In addition, 98% of the firm's mutual funds receive an overall Morningstar rating of three or more stars across all asset classes, whereas 90% of Nuveen's funds have an overall Morningstar rating of three or more stars across all asset classes, as of March 31.
