Smith Breeden to be acquired by French company

Jun. 03, 2013 @ 06:05 PM

No major personnel or investment process changes are expected at the Durham-based institutional asset management firm Smith Breeden after the firm’s planned acquisition later this year by a Paris-based firm.

An agreement has been signed to make Smith Breeden Associates a subsidiary of Amundi, a Paris-based firm that had about $955 billion in assets under management as of March. The Durham firm, which has about $6.4 billion in assets under management, will change its name to Amundi Smith Breeden following the acquisition, which is expected to close by the end of September.
“We’re just excited about the partnership, and I think it’s a great thing for Durham to have a global company’s U.S. headquarters in Durham,” said Mike Giarla, Smith Breeden’s CEO and board chairman. “We’ve been around for 30 years; we’re looking forward to another many decades of good things here,” he added.
Amundi is expected to shift its U.S. headquarters to Durham, Giarla said, where the firm has about 53 employees working out of offices downtown in the Diamond View II building that overlooks the Durham Bulls Athletic Park. The firm has a total of 60 employees with a second office in Boulder, Colo.
Charlotte Binche, a spokeswoman for Amundi, said in an email that Amundi has about 15 employees working in offices in New York, as well as employees in Montreal. She said its U.S. operations will be concentrated in Durham, but its Montreal operations will not change.
“I would say that that (at) the first level, the main level of change is in corporate governance,” Giarla said of Smith Breeden’s acquisition. He will continue to manage Amundi Smith Breeden as CEO, and Patrick Pagni, who is currently Amudni’s senior regional officer for North America, will serve as the subsidiary’s executive chairman. Giarla said another senior Amundi executive will shift from London to Durham.
Smith Breeden was not really looking to be acquired, Giarla said. No specific financial terms of the acquisition agreement were disclosed. However, Giarla said Smith Breeden’s equity-like incentives will be substantially similar.
He said benefits of the acquisition for Smith Breeden include access to the global resources of Amundi, which he said has investment offices in Asia and Europe.
“We’ll be, over time, working with Amundi on global fixed-income products and we think those will be of benefit to our clients as well,” he said. “And then just also for Smith Breeden, with a partner like Amundi, we’ll be able to continue to deepen and broaden our expertise in capacities in the U.S. fixed-income market as well.”
For Amundi, he said the firm wants to develop its U.S. investment management activity.
“Their firm is quite well known in European and Asian markets, but not so much known in the (United States),” said Steve Eason, Smith Breeden’s executive vice president.
Smith Breeden was co-founded in 1982 by Gregory L. Smith and Douglas T. Breeden, a finance professor at Duke University’s Fuqua School of Business, initially as an interest rate risk advisory firm for financial institutions.
The firm now provides asset management services to pension funds, endowments, foundations, funds-of-funds, and supranational bands. It’s focused on fixed-income investments such as in bonds or mortgage-backed securities.