CHICAGO - Oak Brook Terrace, Ill.-based Van Kampen Investments Inc. and the newly formed McDonnell Investment Management closed on a deal this week that transfers Van Kampen's fixed-income separate account management business to a group of employees led by two longtime company executives who built the business.
Dennis J. McDonnell, former president and chief operating officer of Van Kampen's investment advisory group, will serve as chairman of the new company. Edward A. Treichel, the former executive director of Van Kampen's institutional asset management business, will serve as president and chief executive officer. The firm, which has $6 billion of assets under management, has set up shop in nearby Oak Brook.
Richard Ciccarone, the former co-head of Van Kampen's fixed-income department who purchased the company's Merritt Research Services database this past summer, has also joined McDonnell as its chief research officer. Ciccarone will continue to run Merritt. McDonnell will be an investor in Merritt.
Van Kampen sold the business to McDonnell for an undisclosed price, in a split that McDonnell officials described as a friendly parting aimed at benefiting the firm's client base and Van Kampen.
"Over the years we've had discussions about the strategic focus of the company Van Kampen ," said John McCareins, chief marketing officer for McDonnell. McCareins served in the same role for the business under Van Kampen and had been with the company since 1988. "The idea strategically was that maybe we would be best served if we parted ways."
"I think both parties felt this was best for our clients," said Jim Boyne, general counsel for the new firm and also a longtime employee of the Van Kampen group. With only a single business line, its clients will take priority. "We are now devoting all our time and attention and financial resources to separate account management."
Several market participants said Van Kampen may have been willing to sell the business because of higher profit margins sought by its parent Morgan Stanley.
Van Kampen spokeswoman Connie Kain said the firm's motive in selling the business was linked to the type of services it provided. "It's not consistent with our core business, which is equity and fixed-income mutual funds, unit investment trusts, and equity separate account management," she said.
The separate account management business provides advisory services to private clients including high net-worth retail investors and institutions such as pension funds, insurance companies and corporations. A total of 180 of the business's 190 clients moved over to the new firm, according to company officials. That leaves the firm with $6 billion of the overall $7 billion of assets managed by the Van Kampen subsidiary moving over with McDonnell.
Going forward, the independent boutique will try to grow the business, but at a slow pace with the focus on management performance. "The idea is not to double the assets by next year," McCareins said.
The private client business was launched in 1987 by Dennis McDonnell with the hiring of Treichel. Van Kampen was then owned by Xerox Corp. and it provided the first assets to manage.
The firm first registered as an investment adviser with the Securities and Exchange Commission in July and amended the filing yesterday as a result of the deal's closure.
