Mellon Financial has owned a portion of the business since it was created in 1991. Pareto’s employees currently own 40% of the firm, while Mellon and XL Capital Ltd each own 30%. The definitive agreement covers the acquisition of the remaining 70%, according to a news release.
Mellon will be acquiring Pareto’s currency management business, which manages $35 billion in assets, and Pareto’s global fixed-income asset management business, which manages $3 billion. Separately, Pareto will sell its New York-based core/core plus and high-yield fixed income asset management businesses, with approximately $3 billion under management, to MacKay Shields LLC, a unit of New York Life Insurance. Per terms of the deal, Dan Roberts, who currently heads the Pareto arm, will join MacKay Shields as a Senior Managing Director, with Michael Kimble,Taylor Wagenseil and Louis Cohen joining as Directors in the firm.
“Pareto’s currency management business is becoming an increasinglyintegralpart of our strategic growth plans, and we are looking forward toleveragingPareto’s intellectual capital and global perspective to createadditionalinnovative strategies for the benefit of our clients,” said Ronald O’Hanley,Mellon vice chairman and president of its institutional asset managementbusiness. “The global fixed-income operation will augment thecapabilities ofour Standish Mellon Asset Management subsidiary.”
Pareto will focus exclusively on currency strategies and the firm’s fixed income professionals in London and Los Angeles will join Standish Mellon, a Mellon subsidiary. Mitchell Harris, Pareto’s current chief executive officer, has relocated to Boston to take over as CEO of Standish Mellon, succeeding William Adam, who will become chairman of Standish Mellon until he retires at the end of the year. Michael Shilling, who has been head of portfolio services at Pareto since 1998, will become Pareto’s CEO.
In November 2003, Desmond MacIntyre was named Pareto’ global chief operating officer, a role the firm createddue to growth in its business. MacIntyre’s background includes stints as chief financial officer at General Motors’ pension fund in the US, and at Asset International, the parent company ofPLANSPONSOR.com(See MacIntyre Lands Global COO Gig at Pareto ).
The Mellon Financial-Pareto transaction is expected to close in the third quarter of 2004,subject toreceipt of regulatory and other approvals.Terms of the transactions were not disclosed.