We hope we are not dwelling too much on the latest twist and turn over the future of Russell Investments, given the de-stabilising effect of all the talk and rumours. But ‘Investor Strategy News’ thinks it’s important, given the consulting and multi-manager firm’s historical influence on the industry worldwide and in Australia. Here’s the latest twist.
The sale of Russell’s investment arm globally, by London Stock Exchange, appears to have hit a snag given that the rumoured preferred buyer, China’s Citc Securities, has suffered considerably from the Chinese share market meltdown of the past two months.
Citic is a Chinese state-owned enterprise and financial services conglomerate which emerged as the most likely buyer of Russell’s investments arm this year, ahead of competitor Towers Watson and various private equity firms. At one stage it was even suggested a Chinese gaming company was a candidate buyer.
LSE, which bought the Russell group last year, is retaining its index business but selling its investments arm, which consists of multi-manager funds management and a traditional asset consulting business.
In Australia, Russell can lay claim to introducing professional asset consulting to the market in the mid-1980s. This had many benefits for super funds, the most immediate being the introduction of asset class specialist management.
Now, according to Bloomberg, the LSE’s plan to sell Russell Investments to Citic “is faltering and may soon collapse”. A Bloomberg report last week said: “The plunge in the Chinese stock market since mid-June, as well as investigations into some Citic Securities executives, have derailed the discussions… China’s biggest listed brokerage had been in advanced talks to buy the funds management business for about US$1.8 billion, a person with knowledge of the matter said in July.”
Bloomberg said last week that LSE had begun speaking again with other bidders for Russell Investments. Talks with Citic Securities haven’t been completely shelved.
Citic Securities has become a focal point of a campaign by the Chinese authorities to root out financial wrongdoing and assign blame for the nation’s US$5 trillion stock rout. The company’s president, Cheng Boming, is being investigated by the police, with the state-run Xinhua News Agency reporting that he’s one of seven Citic Securities executives facing probes for offenses including alleged insider trading.
– Greg Bright