The appointment of Emmanuel Roman as chief executive of Pimco raises questions about whether acquisitions could be on the cards for the US asset manager, an analyst note from Morningstar says.
Pimco launched a process in early 2016 to shake up its executive management, which eventually turned into a quest to find a new chief executive, culminating in the announcement this week Roman from Man Group would replace Doug Hodge.
Since star fund manager Bill Gross left the firm in September 2014, the asset manager’s assets under management have slumped from $1.9trn to $1.5trn, with a substantial proportion of those figures ($400bn) being managed for parent company Allianz.
“Roman’s previous tenure at Man Group coincided with a period of acquisition-led growth for that firm, which contrasts with the culture of organic growth that has prevailed at Pimco so far. It remains to be seen how he will be able to reconcile these two aspects,” says Mara Dobrescu, Morningstar analyst.
Acquisitions during this period, when he first chief operating officer and then CEO, included London-based investment manager NewSmith, around $1.2bn of assets from Merrill Lynch Alternative Investors and hedge fund manager Pine Grove Asset Management.
Dobrescu describes Pimco as traditionally “all but allergic to such moves”.
Pimco would not confirm whether Roman’s appointment meant a shift towards acquisitions, but it is understood his M&A experience is considered a unique selling point.
Responding to Fund Strategy questioning on potential changes to its strategy, the asset manager said: “Roman will help drive Pimco’s continued evolution as a provider of investment solutions built on the firm’s active management expertise in areas such as core bonds, non-traditional strategies, private credit, distressed debt, equities and real estate, among others.”
The Morningstar note also raised questions about how other members of senior management would respond to Roman’s appointment.
The replacement of existing chief executive Doug Hodge was viewed as a surprise by Morningstar, as there was no indication business management itself was a problem during his tenure.
It says the rise of president Jay Jacobs had indicated he would be a candidate for the chief executive role and it queried whether he would remain sufficiently content to stay with the firm.
But it pointed out that Pimco places considerable emphasis on keeping employees through lucrative compensation and profit sharing.
Morningstar says Roman’s appointment will have no near-term effects on its rating of Pimco funds.