The acquisition of Eaton Vance, which manages $474.4bn of assets, advances the banking behemoth’s strategic transformation across three areas – institutional securities, wealth management and investment management.
The move renders Morgan Stanley Investment Management (MSIM) as a leading asset manager with around $1.2trn of AuM and combined revenues of upwards of $5bn.
According to the statement released today, MSIM and Eaton Vance are “highly complementary with limited overlap in investment and distribution capabilities”.
James P. Gorman, chairman and chief executive officer of Morgan Stanley, reinforced the cultural alignment of the two firms, describing Eaton Vance as “a perfect fit for Morgan Stanley”.
The acquisition of Eaton Vance means Morgan Stanley will now oversee $4.4trn of client assets and AuM, alongside driving the addition of more fee-based revenues to “complement our world-class investment banking and institutional securities franchise”.
What does Eaton Vance get from Morgan Stanley?
For Eaton Vance, joining US-based bank will enable the firm to further accelerate their growth through harnessing the mutual values and strengths whilst remaining focused on “a commitment to investment excellence, innovation and a client service”.
Chief executive officer of Eaton Vance, Thomas E. Faust Jr. said: “Over many years, Eaton Vance has delivered above-market growth by aligning our business with leading trends in asset management.” “Bringing Eaton Vance’s leading brands and capabilities under Morgan Stanley creates a uniquely powerful set of investment solutions to serve both institutional and retail clients in the U.S. and internationally.”
Dan Simokwitz, head of MSIM, praised the firm’s prospective contributions: “Eaton Vance brings strong brand recognition and high quality complementary platforms in key secular growth areas, providing numerous incremental opportunities to increase the reach of our asset management franchise and our value proposition for clients.”
The joining of the two firms will enhance client opportunities through bringing Eaton Vance’s leading U.S. retail distribution together with MSIM’s international distribution.
For shareholders, the acquisition represents a positive transaction which will deliver long-term financial benefits. It is expected that Morgan Stanley will be better placed to generate attractive financial returns through increased scale, improved distribution, cost savings of $150MM – or 4% of MSIM and Eaton Vance expenses – and revenue opportunities.
Whilst the transaction has been approved by the voting trust that holds all of the voting common stock of Eaton Vance, the acquisition remains subject to customary closing conditions, and is expected to close in the second quarter of 2021.