TIAA-CREF to Acquire Nuveen Investments

On Monday, TIAA-CREF announced that it will acquire Nuveen Investments from private equity firm Madison Dearborn Partners. Both firms currently have Morningstar Parent Ratings of Neutral. In all, the consolidation of the two firms will bring TIAA-CREF's total assets under management up to $790 billion from $569 billion. TIAA-CREF expects to close the deal by year-end.

From a day-to-day standpoint, fundholders of both firms should see little change. TIAA-CREF plans to keep Nuveen as a stand-alone entity, which means that both firms' respective management teams, fee levels, operating structures, and brands should remain intact.

Given that TIAA-CREF focuses primarily on academic and not-for-profit retirement plans while Nuveen has a greater retail presence, the acquisition would allow both firms to broaden their distribution networks. The move will also give TIAA-CREF a more diversified platform, which includes Nuveen's established municipal investing and closed-end fund efforts.

The $6.25 billion deal includes $4.6 billion of outstanding debt on Nuveen's part. TIAA-CREF intends to deleverage the firm, which is an overall positive for Nuveen in terms of financial stability.

Madison Dearborn had owned Nuveen since 2007, when it acquired the then-publicly traded firm for $5.75 billion. Prior to its two years or so as a publicly held firm, Nuveen had been owned from 1974 until 2005 by St. Paul Travelers (now the Travelers Companies (TRV)). St. Paul Travelers sold its 79% stake in Nuveen in a secondary offering in 2005 in a move to shore up the insurer's cash position following the setting-aside of nearly $1 billion for asbestos claims.

Steven Pikelny does not own shares in any of the securities mentioned above.