The deal for Rydex appears to be moving to the next stage. The sale of the Baltimore-based fund firm has moved a step closer to completion as the list of those interested has narrowed to a handful, The MFWire has learned. Those bidders make up an eclectic mix and include a century-old Midwestern insurer, an old-school Boston fund distributor from Boyleston Street and wannabe immigrants from London.

While some industry insiders expected private equity firms to step up to the plate, the list of leading bidders submitting offers to Goldman Sachs (Rydex's investment bankers) includes all strategic bidders, rather than financial bidders.

A source familiar with the sale cited the United Kingdom's Man Group, Topeka, Kansas-based Security Benefit and Boston-based IXIS Asset Management Distributors as the current top bidders interested in the firm. The price for the company is likely to run at about 10 to 12 times Rydex's $67 million EBITDA, or about $650 million to $800 million, according to one banker with knowledge of the current pricing in the market. That high price may be too steep for parties interested in the deal as a pure financial play.

The London-based Man Group is the most interesting name on the list. Though Man is a giant in the alternatives market and does have a presence in New York, the firm is not a player in the U.S. mutual fund business. One reason for the bid -- Man officials in London did not return phone calls seeking comment on the potential deal -- could be that the firm is seeking distribution through the strong base of advisors and brokers using the Rydex funds and ETFs.

That the company is interested in the United States is not a secret. Its Web site explains that "Man Investments sees particular opportunity for future growth within the U.S. and has built a team to focus on this region." That team reports to Man Investments CEO Stanley Fink.

IXIS, which is French owned, is a more traditional player in the fund business. The fund group has been putting together a collection of fund firms since it was part of New England Life and then MetLife. It now boasts of 14 affiliated investment management firms in the United States that manage some $247.1 billion in assets under management as of December 31, 2006. Those units include some well-known names, including Harris Associates, Loomis Sayles, Reich & Tang and Capital Growth Management. IXIS officials also did not return calls seeking comment.

Fund industry insiders report that Rydex would not be the first fund firm auction Security Benefit has recently jumped into. The insurance company has a strong presence in the variable annuity market and the distribution of individual retirement products.

Who will come out on top is still an open question, but look for events to move relatively quickly under the the supervision of the bankers from Goldman. 

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