Nationwide acquires 17 funds from HighMark Capital

NEW YORK Wed Apr 3, 2013 2:45pm EDT

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NEW YORK (Reuters) - Nationwide Financial said on Wednesday it entered an agreement with Union Bank's HighMark Capital Management to acquire 17 equity and bond mutual funds with $3.6 billion in assets.

Separately, HighMark is selling its five money market funds to New York-based Reich & Tang.

The terms of the deal were not disclosed. Reuters first reported the deal on Tuesday.

Under the deal, HighMark will become the subadviser to nine of the funds it currently manages in the form of nine new Nationwide Funds, according to the announcement. The outside subadvisers for the other eight funds will remain in place.

Highmark is a subsidiary of Union Bank N.A, which is part of UnionBanCal Corp. Union BanCal had $97 billion in assets at December 31, 2012, and is a unit of Mitsubishi UFJ Financial Group Inc 8306.T.

With the acquisition, Nationwide will have a total of $51 billion in its fund business.

For Columbus, Ohio-based Nationwide, the acquisition represents another step in the firm's push to grow its retail mutual fund business, Michael Spangler, president of Nationwide Funds, told Reuters in an interview.

Over the past year, the firm has grown its fund wholesaling force to 19 people from 12 and has created a four-person sales team focused on selling its mutual fund to defined contribution retirement plans, Spangler said.

Nationwide might look at further acquisitions in the future and would be particularly interested in growing its fund offering investing in emerging markets, he said. For now, however, the firm will focus on getting the current deal with HighMark completed, he said.

The deal is expected to close by the early fourth quarter of this year.

For Reich & Tang, the acquisition of HighMark's money market funds marks the second acquisition in as many years for the company. The firm completed a merger of the ValueLine U.S. Government Fund in 2012.

Nationwide and Reich & Tang both used Cambridge International Partners as their financial adviser. Berkshire Capital Securities acted as the financial adviser to HighMark and Union Bank. Bingham McCutchen was the legal adviser to HighMark and Union Bank. Stradley Ronon Stevens & Young LLP acted as legal counsel to Nationwide.

(Reporting by Jessica Toonkel; Editing by Bernard Orr and Andre Grenon)

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