As the summer comes to a close, fundsters interested in the 401(k) space have two big deals to keep track of.

Industry sources have told MFWire that both The Hartford [profile] and Ascensus, Vanguard's small-market 401(k) partner, are reaching the final stages of a sale process that started to boil early this summer. The Hartford is hanging on to its mutual fund business but selling its 401(k) recordkeeping arm. The two recordkeepers are ending up at different destinations (401kWire, July 3).

Our sister publication, the 401kWire, first reported on the winding down of these two sales.

Top executives at The Hartford have narrowed the field to five finalists in the sale of the insurer's defined contribution recordkeeping business. The deal is in the final stages, and MassMutual Financial has emerged as the most likely buyer for the business, according to multiple industry sources. That deal could be completed by the end of the month.

A MassMutual spokesperson declined to comment citing policy to not comment on industry rumors and speculation.

Other firms in the negotiations were Lincoln Financial and New York Life, say sources. Prudential has also been speculated on as a potential buyer for the business. Lincoln, New York Life and Pru all have existing 401(k) businesses. One source pointed to Warren Buffett-backed Symetra as a fifth bidder for the Hartford's 401(k) business.

Hartford's recordkeeping operations are run on DST's platform and are one of DST's largest blocks of business.

Hartford executives announced their intention to sell the roughly 1.5 million participant business in March. At that time virtually all of the major recordkeepers took a look at least a passing glance at the business.

Meanwhile, private equity giant J.C. Flowers was much more quietly shopping its Ascensus 401(k) plan business over the spring and summer, eventually asking for as much as $300 million, according to industry sources. Potential buyers for that 1.5 million-participant book were narrowed to Great-West and DST, according to industry sources. One source added that Wells Fargo also made a bid for Ascensus' business. Wells Fargo owns the WyStar recordkeeping platform, a variation of which underpins the Ascensus product.

The 401kWire learned that DST was the leading bidder for the Ascensus business, but walked away from the deal due to contractual issues. One of Ascensus' successes has been its partnership with Vanguard. That alliance allows Ascensus to distribute a Vanguard-branded product to the advisor-sold small and mid-size 401(k) plan market that pairs Vanguard's mutual funds with Ascensus' TPA services and recordkeeping. As part of that deal Vanguard holds right of first refusal if the business is sold as well as certain other indemnifactions from Ascensus. That relationship complicated the negotiations, said one source.

Flowers started the sales process after it sold Crump Life Insurance and Crump Property & Casualty early this year (401kWire, Feb. 21).

With DST walking out of the picture there likely will not be any deal for Ascensus made soon as other recordkeepers are not likely to match its price, says one deal maker. One possibility would be for Flowers to flip the business to another private-equity firm.

"Flowers can be patient and can wait for a deal," said that source.  

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