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Morgan Stanley to acquire Eaton Vance

The acquisition will expand MSIM's fixed income and ESG capabilities.

Morgan Stanley and Eaton Vance have entered into a definitive agreement under which Morgan Stanley will acquire Eaton Vance for $7bn, according to a joint statement from both firms.

The acquisition will boost Morgan Stanley Investment Management’s (MSIM) AUM from $665bn to $1.2trn, with at least $5bn of combined revenues, the statement said.

The deal is expected to close by the second quarter next year.

In Asia, Eaton Vance offers nine mutual funds to accredited investors in Singapore, while MSIM offers 17 retail mutual funds in Hong Kong and nearly 70 products to accredited investors in Singapore, according to data from FE Fundinfo.

The firms said that the two businesses will complement each other and have limited overlap in investment and distribution capabilities.

“These two businesses have limited overlap and are combining from positions of strength to create one of the leading asset managers in the world. We look forward to this partnership,” Dan Simkowitz, Head of MSIM, said in the statement.

Fixed income, ESG expansion

Katie Rushkewicz Reichart, director for US equity strategies for manager research at Morningstar, said in a note that the acquisition will expand MSIM’s fixed income capabilities.

“MSIM previously hinted that it would be open to making acquisitions, particularly in areas in which it lacked scale or capabilities. It achieves that goal with this deal,” Reichart said.

MSIM has been trying to raise its profile on the fixed income side, according to Reichart. The firm hired Brian Weinstein from Blackrock in 2018 to lead the effort and Julie Callahan joined from Pimco in June this year to build out a municipal bond business.

“The Eaton Vance acquisition will more immediately and directly fill holes in its fixed income lineup, particularly on the municipal and high yield bond front,” Reichart said.

With the acquisition, MSIM will also gain Eaton Vance’s ESG franchise, Calvert, according to the statement. Calvert manages 28 responsible investment strategies, with $23.4bn in AUM, according to the firm’s website.

Morningstar’s Reichart noted that MSIM just only recently started to boost its ESG efforts with the hire of Emily Chew as global head of sustainability in March this year.

“Branding decisions and plans for lineup consolidation are unclear at this point,” Reichart added.

Part of the Mark Allen Group.