New York Life plans to acquire a one-third interest in Edina-based Cornerstone Capital Management and merge its large-company growth mutual fund into Cornerstone's better-performing Cornerstone Keystone Large Cap Growth Fund.
Through its Mainstay Investment arm, the Manhattan-based insurance-and-investment conglomerate also plans to acquire majority control of Cornerstone from its three local owners over the next several years.
Cornerstone, which manages $350 million in the mutual fund that is open to the public and more than $2 billion in private accounts for pension funds and insurers, said the acquisition would lead to an increase in assets and business for the 17-employee firm.
The acquisition price was not disclosed. The ultimate price in these transactions often is dependent on long-term investment performance and asset growth of the acquired money manager.
Tom Kamp, a portfolio manager and owner of Cornerstone, said he expects an asset infusion of about $1 billion from New York Life after the deal closes in January, resulting from the merger into Cornerstone of Mainstay's large-capitalization fund, which is about twice as big as Cornerstone's large-cap product, and other investments. New York Life also is expected to invest customer money in Cornerstone's customized separate accounts for institutions.
Kamp said Cornerstone should get "explosive" growth because what will become the "MainStay Cornerstone Growth Fund," run from Edina by Cornerstone's portfolio managers, will attract assets through New York Life's large retail distribution system of agents and financial planners.
"Cornerstone has a strong track record of achieving long-term investment success for its clients," said Yie-Hsin Hung, head of institutional investments for the investment group of New York Life. "Its expertise in investing in large-cap growth equities complements our overall investment capabilities and positions us for growth."
The Keystone large-company fund has been a top-third performer among its peers for the last five years.
It focuses on the stocks of 35 to 55 high-growth, large-capitalization companies with at least $3 billion in market capitalization.
Cornerstone, led by CEO Andrew Wyatt, was founded in 1992. Kamp joined Cornerstone from the local office of Alliance Capital Management in 2006. The other owner is Twin Cities businessman David Frauenshuh.
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