Guggenheim Partners LLC, an investment firm founded by the famous family for which it is named, announced today it is acquiring Security Benefit Corp. — and with it Rydex SGI.
Guggenheim Partners LLC, an investment firm founded by the famous family for which it is named, announced today it is acquiring Security Benefit Corp. — and with it Rydex SGI.
It's Guggenheim's second acquisition of an exchange-traded fund provider in less than a year, after the Claymore Group was bought last summer.
The fact that Rydex SGI offers ETFs, however, was not the primary consideration behind the acquisition of its parent company, said Todd Boehly, managing partner in the office of the chief executive of Guggenheim Partners.
Securities Benefit built “an impressive business” and its various units are “a natural fit” with Guggenheim, he said.
In addition to Rydex SGI, Securities Benefit businesses include Security Financial Resources, a provider of retirement plan services for more than 135,000 accounts nationwide, primarily in the education marketplace. Security Benefit Life provides fixed and variable annuities to about 200,000 policyholders. Finally, there is se2, a provider of administrative services for the insurance and financial services industry with more than 700,000 policies and $30 billion in third-party assets under administration.
Mr. Boehly did note that acquiring Rydex SGI “presented to us and an attractive opportunity,” Mr. Boehly said.
The unit had about $22 billion spread across an array of products that included $3.1 billion in 31 ETFs at the end of 2009.
Guggenheim's earlier pickup, Claymore, provides supervision, management, servicing and distribution on about $13 billion of assets that included $2.9 billion in 32 ETFs at the end of last year.
For now there are no plans to integrate Claymore and Rydex SGI, but “longer term, we'll be looking at lot of things related to how to optimize business,” Mr. Boehly said.
Rydex SGI chief executive Rich Goldman said he is happy with the deal.
The Guggenheim-led group will make an investment of approximately $400 million in Security Benefit, some of which will help Rydex SGI, he said.
“This helps foster and accelerated approach” to new product development, Mr. Goldman said.
Currently, Rydex has plans to launch “a lineup of new innovative products” within the next six to nine months, he said.
As part of the transaction, Howard R. Fricke, who served as Security Benefit's president and chief executive from 1988 to 2000 and chairman from 1996 to 2006, will serve as interim chairmam, president and chief executive, effective immediately. He will lead the organization through the transition until Guggenheim identifies a permanent CEO and president for the firm.
Mr. Boehly, who has spent the last eight years building Guggenheim's credit investment management business, will serve as chairman following the close of the transaction.
Kris A. Robbins, who has been with Security Benefit for the past 12 years, most recently serving as chairman, president and chief executive, today announced his retirement from the organization, effective immediately.
Additional terms of the transaction — expected to close in the late second quarter or early third quarter — were not disclosed.
Rydex SGI was created last summer out of the merger of Rydex Investments and Security Global Investors.
The two money management operations had been a division of the same parent company since January 2008, when Rydex was acquired by Security Benefit.
