Morgan Stanley announced it is buying fund manager Eaton Vance for US$7 billion just days after completing its takeover of discount broker E*Trade Financial, continuing the firm’s shift away from trading toward steadier, simpler businesses like money management.
The deal would nearly double the assets that Morgan Stanley manages on behalf of pension funds, insurance companies, and other clients, to US$1.2 trillion, as well as add about US$1.7 billion of annual revenue, reported the Wall Street Journal.
Morgan Stanley’s asset-management arm is the most profitable of the bank’s four divisions, but also its smallest, and had been seen as too niche to compete with larger rivals.
Boston-based Eaton Vance, founded in 1924, brings about US$500 billion in assets and bulks up Morgan Stanley’s undersized presence in bonds and sustainable investing.
Morgan Stanley Chief Executive James Gorman said Eaton Vance executives approached his firm a few months ago and found a receptive buyer, but that the bank needed to complete its takeover of E*Trade first, which happened last week.
