By Niki Natarajan
The body has not been pronounced dead yet, but a team of
investigators is already looking for clues to find out why the
once robust $15 billion fund of funds firm, founded by Larry
Simon and Howard Wohl in 1984, now appears to be on life
support. How did this shining star fall so far?
As InvestHedge went to press, Ivy Asset Management was still
in the intensive care unit, but, from the outside, the now
$4.99 billion firm looked perilously close to the graveyard.
Indeed, sources say some staff have started to send CVs flying
around the industry and there are rumours about SkyBridge
planning to act as organ recipient to parts of the
Amid reconstructing the business, parent BNY Mellon
confirmed that this is part of an ongoing reorganisation that
is going to see the alignment of its three fund of funds
businesses under Phil Maisano, head of alternative investments.
As with any implant, however, only time will tell if the body
accepts or rejects the new organ.
So far, Mellon Global Alternative Investment has been
absorbed by EACM, but further evidence to corroborate rumours
of the closure of Ivy's commingled fund and Mellon taking over
the managed accounts assets could not yet be found.
Mighty Mellon, like an eccentric collector, has been
hoarding boutique asset management companies for decades and
usually leaves them well alone. In fact, in the asset
management M&A world, being bought by Mellon typically
guarantees a 'hands-off' parenting approach. So what happened?
Why has Mellon decided to discipline the child now?
Many believe that Ivy's baby was thrown out with the bath
water when founders Larry Simon and Wohl handed over the reins
in 2000. A succession plan with Sean Simon, son of Larry, at
the helm seemed to make sense. But what now looks like a poor
investment diet took its toll and it seems that BNY Mellon's
intervention is simply the only way the doctors can help Ivy
recover from a double Amaranth Advisors and Madoff heart
In Tim Galway's Inner Game of Tennis, Performance =
Potential - Interference. But when, if ever, did 'interference'
creep into Ivy? Indeed, is an M&A deal an automatic death
knell to performance?
In this issue alone, we report that Weston Capital
Management has announced its sale to Fund.com and Standard Life
has bought Aida Capital. Are these firms doomed? And if they
decide to head down that route, are there clues as to what
makes a good parent?
One thing that many of the winners at the recent InvestHedge
Awards have in common, including Aurora and Archstone, is that
they are independently run (or at least have hands-off
Another winning denominator seems to be that they have not
lost their passion for investing, usually because the founding
investment team stays intact. The Orbita funds (which have
moved from Coutts to RBS and now to Aberdeen) are a perfect
example, with Michael Timmerman and Robert Dawkins still at the
A sale to a distributor with no conflicting product also
seems to work, as Permal has shown with its relationship to
Legg Mason. Looking back in history, it seems like any adoption
deal where there are two similar businesses vying for attention
have resulted in either death or separation -as IAM and Cadogan
seem to have shown by opting to go solo again.
Meanwhile, many eyes are on the future of Man Investments,
which has merged Glenwood and RMF - two of its units but with
very different philosophies - following a combined fall in
assets from $54 billion at 30 June 2008 to $17.1 billion at the
end of 2009. Many are asking: will its rebrand - in part to
shed the Madoff tarnish - succeed? Likewise, many will be
watching to see what Mellon makes of a three-sided merger
including the remaining bits of Ivy.