Principal Boutique Unit Has Robust Deal Pipeline, McKenzie Says

  • Asset manager looking for alternative investing strategies
  • Buybacks are also an option for capital deployment after slump

Principal Global Investors has options to expand through acquisitions as the asset manager seeks to add more capabilities beyond stocks and bonds, said Barb McKenzie, chief operating officer of boutiques.

“We still have a really robust pipeline of deals we’re looking at,” McKenzie said Thursday at a conference sponsored by Citigroup Inc. “They range across the landscape from larger deals, that obviously are more complex to land but could bring some scale benefits, to just much more opportunistic, single-asset categories.”

PGI, an investing arm of Des Moines, Iowa-based insurer Principal Financial Group Inc., has been building operations in boutiques to diversify offerings. Principal bought Origin Asset Management in 2011 to expand outside the U.S., and has purchased stakes in businesses such as Columbus Circle Investors. Dan Houston, who took over as the insurer’s chief executive officer in August, has said he’d be interested in adding investment managers for assets such as infrastructure and timber.

The insurer has declined 13 percent in New York trading since Dec. 31 after falling a similar amount last year, encouraging the company expand its buyback authorization last month.

“Share repurchase obviously looks pretty attractive,” which could make it harder to justify spending on acquisitions, McKenzie said. “We’ll just have to see how the environment plays out and what makes the most sense for our shareholders in terms of where we’re deploying capital in 2016.”

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