U.S. Bank inked a deal to purchase PFM Asset Management LLC under its subsidiary, U.S. Bancorp Asset Management, the firms said Thursday.
PFM Asset Management will continue to operate as a separate entity. The deal does not affect PFM’s financial advisory business which will continue to operate independently.
PFM Asset Management and U.S. Bancorp Asset Management had combined assets under management and assets under administration of more than $325 billion on March 31, 2021, the firms said.
“PFM Asset Management brings a wide array of client relationships and product offerings, including local government investment pools, outsourced chief investment officer services and separately managed accounts in both fixed income and multi-asset class strategies,” said Eric Thole, head of U.S. Bancorp Asset Management. “These services complement U.S. Bank’s current book of business and we’re thrilled to have the opportunity to increase our presence nationally and solidify U.S. Bank’s position as a leading provider of investment solutions.”
Marty Margolis, head of PFM Asset Management, said the sale combines the resources of two organizations, which "recognize the importance of providing clients with exemplary customer service; our commitment to clients will remain a priority throughout the transition. We’re also very pleased that U.S. Bank aligns with our fundamental belief in creating a diverse, inclusive and ethical culture.”
The definitive agreement was signed on Wednesday and the deal is expected to close in fourth quarter 2021, subject to regulatory approval. Financial terms were not disclosed.
“PFM will continue to provide outstanding financial advisory and consulting services to state and local governments and the nonprofit sector,” said Dan Hartman, who currently leads PFM’s financial advisory practice and will lead PFM as its president and CEO after closing.
John Bonow, current president and CEO, will retire after the acquisition is final.
“We’ll continue to have a formal channel" with PFM Asset Management and now U.S. Bancorp Asset Management, Hartman said. “It really allows us to focus on our platforms, use our capital clearly within the financial advisory and consultant businesses. Everything we do guides us to do what’s best for our clients and our employees. We think this move fits that bill so we are excited.”
“We’ve had a growth strategy in place, which includes geographic growth, sector-specific growth and a focus on infrastructure,” among other areas, he said.
For the year ended December 31, 2020, PFM advised on 995 overall transactions totaling more than $69.7 billion in par amount, according to the firm.
In terms of other areas of focus, including environmental, social and governance, Hartman said PFM has incorporated it in a lot of the business it does.
"We’ve had a long history in that space. It is woven into what we do and part of the trends we see provides opportunities moving forward," he said. Hartman cited PFM's consulting business, which has focused on equitable budgeting and the intersection between criminal justice policy and finance.
After the federal stimulus and the vaccination-led recovery, there is not a “great deal of risk” in municipals.
The COVID impacts and the recovery are still in a “nascent stage” he said, but now PFM is working with its government clients “to use debt in a way that provides long-term credit stability in what we see is a focus on longer-term needs. Infrastructure particularly — as the bill gets worked out in Washington — we see clear needs that are demonstrated every day, from bridges to roads to clean energy, those are needs going forward.
“I’m reminded about 30 years ago when I started at PFM in Philadelphia, straight out of college. I did not know much about public finance at the time, but I had a lot of eagerness to start.
Thirty years later, Hartman said he still feels excited about the industry.
“I remember the way I felt then and I feel the same way today. PFM is a great place to be, for me personally, the feeling is that the best is yet to come. We’re excited about the next chapter.
"We have a great platform, all employees are moving with us, it should be a seamless transition," Hartman said.
U.S. Bancorp Asset Management is part of U.S. Bank’s Wealth Management and Investment Services division, which has more than $8.6 trillion of assets under custody and administration and $244 billion of assets under management, globally. In addition to offering asset management products and services, it also offers global corporate trust and custody services, alternative investment, fund custody and administration services, and wealth management services.
Piper Sandler & Co. served as strategic and financial advisor, and Dechert LLP served as legal counsel to PFM. McCarter & English served as legal counsel to PFM’s financial advisory business. Jones Day served as legal counsel to U.S. Bank.
