Nuveen completes Schroders acquisition, plan to organise private markets by asset class

Nuveen, a US asset manager subsidiary of TIAA, has now completed its acquisition of Schroders in a ~£9.9 billion deal, today setting out a plan to operate separately for 12 to 18 months then realise integration synergies, among which of greatest relevance to our readers private markets is expected to be organised by asset class.

Back in February, the two asset management giants announced the acquisition would create a significant global group with around US $2.5 trillion of assets under management. They also said at the time that the Schroders brand would be retained.

Schroders has been active in the insurance-linked securities market through a stake in and then ownership of a specialist ILS management team since 2013, when it bought into Secquaero Advisors, taking a 30% stake in the ILS specialist advisor and manager at that time. Secquaero was launched in 2007 by industry veteran Dirk Lohmann.

The ILS team then moved within the private markets division of Schroders, Schroders Capital, following a 2019 transaction when the global asset management group increased its ownership stake in Secquaero Advisors AG to 100%.

Now, the Schroders Capital ILS team manages more than $6.5 billion in ILS assets for its third-party investor clients, operates one of the  largest catastrophe bond fund strategies in the world, and manages private ILS strategies which are focused more on collateralized reinsurance investments, while it has offered life ILS investment strategies as well.

As a result, Schroders has held a stake in a dedicated ILS investment manager for some years, taking full ownership of one in 2019.

Cat bond and ILS investment management remains a core private market alternatives offering of Schroders, sitting within the private debt and credit alternatives area of Schroders Capital.

With the completion of Nuveen’s acquisition of Schroders today, the company stated, “Over the next 12–18 months, Schroders will continue to operate separately within Nuveen,” adding that, “Nuveen and Schroders intend to maintain their existing investment teams across both asset and wealth management for at least 12 to 18 months post-completion as integration planning takes place.”

The company now has at least twelve months to organise itself and plan for integration, however encompassing that may be. While continuity will be maintained for investors through that planning period.

Ultimately, the merging of Nuveen and Schroders looks set to be positive for the private markets division, where the ILS activities sit, given the enhanced scale and reach it will deliver, as well as access to sales, distribution and other services.

Nuveen explained that, “The firm intends to organise its combined $400 billion private markets platform by asset class, reflecting a commitment to broadening the firm’s offering to clients.”

The ILS team at Schroders Capital will be a unique addition to the Nuveen structure, as it had not had a specialist unit of its own.

Therefore, it seems there is everything to benefit from, for the ILS team, in becoming a core and distinct asset class offering within a now much larger private markets platform, with even greater access to sales and distribution, as well as wealth management expertise.

That can only benefit the Schroders Capital ILS team longer-term and bring ILS as an asset class to entirely new investors, as the merging of the companies gets underway.