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Berger's Acquisition Hunt Not Over Yet


Berger Funds' efforts to distance itself from its roots as a growth shop may not have ended with last week's purchase of Enhanced Investment Technologies [INTECH]. The firm is actively looking to add a fixed-income group to its business and is hoping to acquire another firm sometime this year, said spokeswoman Sally Carleton.

"We are interested in adding a fixed-income element and are in the process of doing a search. That would round out our offerings nicely," she said.

Last week's acquisition adds $6 billion in institutional assets and gives Berger a more diverse line of products. INTECH offers a series of portfolios including a large-cap core, large-cap growth, large-cap value and enhanced-index portfolios.

Berger will hold a majority interest in INTECH while the firm's leadership maintains a minority stake. Terms of the deal were not disclosed.

The acquisition comes on the heels of Berger's acquisition of Bay Isle Financial, an institutional large-cap value shop that significantly increased Berger's stake in that sector, adding approximately $1 billion in assets. Berger forged a relationship with Bay Isle in 1998 as part of an effort to gradually move away from its growth focus. The firms entered a joint venture together to offer a large-cap value fund. That move away from growth continued last October with the launch of the Berger Large-Cap Value Fund and culminated with last month's acquisition.

"With the expectation of a lower return environment going forward, we believe it is important for Berger to develop a broader set of capabilities," said Jack Thompson, Berger's CEO and president.

The goal now is to integrate Bay Isle and INTECH and extend the firm's product line, Carleton said.

The acquisitions should help Berger expand its distribution capabilities, said Jim Atkinson, the president of Orbis Marketing. "When you buy two institutional managers you not only get the asset management capabilities, but you buy the distribution that's in place."

Prior to both acquisitions, 75% of Berger's distribution was aimed at retail clients with the remaining 25% targeting institutional investors, Carleton said. With the addition of INTECH, that ratio is close to 60-40, she said.

Berger's acquisitions also serves to distinguish it from Janus, its sister Stilwell subsidiary, which is a savvy move for Stilwell, Atkinson said. Rather than dilute the Janus brand as a growth manager, Stilwell is using Berger to diversify its holdings, he said.

Including the assets it picked up through the Bay Isle acquisition, Berger Financial held $14 billion in assets under management as of December 31, the company said.