Principal Global Investors plans to purchase emerging markets- and real estate-focused boutique asset management firms

March 11
6:01 AM 2014

Principal Global Investors Chief Executive Officer Jim McCaughan told Reuters that his firm is seeking to purchase boutique asset managers that make investments in emerging markets and real estate in Europe and Asia.

The acquisition is meant to grow their asset portfolio. Based in New York, PGI is the asset management arm of the financial services firm Principal Financial Group Inc that holds headquarters in Iowa, Reuters reported.

While he did not specify any possible targets, McCaughan said they want to complete a purchase, potentially in the field of real estate, before the year ends. He said in the interview, "It's hard to say, but I would be a little disappointed if we don't close at least one during the remainder of this year."

He added that they continue to focus on emerging markets and expressed interest in buying Europe and Asia-focused boutique fund managers because they already have established their footprint in the US. The $311 billion fund manager said it is the 19th biggest pension fund manager in the US, the report said.

The growth of middle-class populations worldwide still makes emerging markets an attractive long-term investment prospect even if this may have been put to the test with their poor showing last year, McCaughan said. He told Reuters, "We are actively looking not only at emerging, but at so-called 'frontier' markets, the smaller and newer markets. So that would be a second broader area and that would be fixed income or equities."

The PGI group now has four asset management firms that makes investments in emerging markets fixed income or equities. Their combined assets reach an estimated $20 billion, the report said.

Last year, PGI bought Liongate Capital Management, a hedge fund of funds based in London with $1 billion in assets. Last year was a good year for PGI as the purchase of Liongate as well as its gains from its investments in equities, real estate and fixed income allowed its assets under management to increase 10% in 2013, the report said.  

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