Shortly after Federated Investors unveiled its deal with Prudent Bear Funds adviser David Tice & Associates, Joe Machi, vice president and director of alliances at Pittsburgh-based Federated, spoke to The MFWire about why the company pulled the trigger on the deal.

Joe Machi Federated Investors Vice President and Director of Alliances

"We saw an opportunity to complement and strengthen our existing alternative strategies team and product lineup," Machi said, praising Dallas-based Tice & Associates' "capabilities, success and investment expertise."

Federated did not tap a financial advisor for this deal, Machi said. Reed Smith served as Federated's external legal counsel.

With the Prudent Bear purchase, Federated executives further cement their reputation as some of the most prolific dealmakers in the fund industry. The latest deal marks the company's 12th transaction in the last five years, many of which are what Machi calls "rollups," in which assets of third-party funds move into existing Federated funds. In other transactions, as in the Prudent Bear deal and the Rochdale transaction (see The MFWire, April 24, 2007), Federated acquires assets plus "manufacturing talent."

The Prudent Bear acquisition, for which Federated is paying an initial $43 million plus future continent payments of up to $99.5 million, covers the $1.2 billion Prudent Bear Fund and the $507 million Prudent Global Income Fund.

"We've been actively working with them on this for the last, eight or nine months," Machi said.

For the Prudent Bear Funds, the deal would open up distribution channels they had not had access to before.

"Today, they're distributed across a few distribution channels," Machi noted.

The Bear Funds, he said, "should be an integral part of most folks' portfolios," he said. "We're going to give it the distribution it needs to get there."

Is Federated on the lookout for more deals?

"We are always busy looking at deals," Machi said. 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE