Guggenheim wants to get bigger!

Guggenheim Partners is in the midst of exclusive talks to buy the massive asset-management business of Deutsche Bank, a deal that could launch the financial firm into a new stratosphere.

The German bank’s asset management business has more than $500 billion in assets under management, compared to the $125 billion Guggenheim now manages.

The purchase could represent a new high point in a drive by Guggenheim to grow, one that was telegraphed when the firm hired former Bear Stearns CEO Alan Schwartz to be executive chairman in 2009.

Schwartz, and CEO Mark Walter, have already expanded the firm’s share of advisory work and made it a giant in the growing world of ETFs.

Here are some highlights from where Guggenheim has popped up in the news recently:

The LA Dodgers bidding frenzy: CEO Walter has teamed up with Magic Johnson and former Atlanta Braves and Washington Nationals President Stan Kasten to bid for the LA Dodgers and have so far survived several rounds of cuts.

New prop-trading division: As bank-holding companies are killing off trading divisions that use their own funds because of regulation, Guggenheim has launched a new unit to do just that. Last summer the bank went on a hiring binge, bringing in several senior executives to staff the unit that is expected to eventually be given $2 billion in capital to trade. The unit started trading with around $250 million to $500 million in capital. It plans to eventually hire some 150 traders for the group.

M&A advising: Guggenheim is still a minor player in M&A advisory, but has made some progress. In 2009 it advised on two deals worth a combined $3.9 billion, according to Dealogic, a data provider. But that grew to 5 deals worth $8.7 billion in 2010 and six deals worth $5.6 billion in 2011, according to Dealogic.

And it lured bank-merger legend Herbert Lurie to its ranks last June. Lurie, the former head of Merrill Lynch’s financial institutions group in the 1990’s once advised on deals worth a combined $115 billion in a single week. Lurie had been out of banking since retiring at the age 41 in 2001.

Obama Fed nominee Jeremy Stein: The economist and Harvard University professor who was nominated to join the Federal Reserve board in December by President Barack Obama has been serving as a consultant to Guggenheim on asset-management strategies.

Adding an A to BRIC, for Artic: Guggenheim Chief Invesment Officer Scott Minerd co-authored an opinion piece in The Wall Street Journal in July advocating for the U.S. to step up its investments in Alaska and the Artic region and to help settle international disputes there to make sure the country gets its share of the natural resources becoming available there. “If the U.S. can wake up to the Arctic potential it possesses, Secretary of State William Seward’s 1867 purchase of Alaska for $7.2 million could turn out to be the single greatest investment in American history,” the piece concluded.

Big CLO deals: Last November, Guggenheim closed a $1 billion CLO, among the biggest deals to launch since the market for CLOs collapsed in 2009. At the time, Guggenheim touted its award as “2011 CLO Manager of the Year.”


by David Benoit – WSJ

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