Federated Investors to acquire Prime Rate

Prime Rate Capital Management LLP announced today that, subject to the relevant regulatory approvals, it is to be acquired by Federated Investors, Inc, one of the world’s largest cash managers with assets under management of $351bn, including $189bn in AAA money market funds.

The move comes just a matter of weeks after Fitch ratings put three of Prime Rate’s liquidity funds on Ratings Watch Negative (RWN). In a statement today Fitch said it had “placed these funds on RWN on 5 December 2011, solely reflecting the agency’s view that the financial resources of the funds’ sponsor (Matrix Group) were no longer consistent with a ‘AAAmmf’ rating”. The takeover by Federated Investors removes any such questions and “subject to FSA approval. Fitch now considers Federated to be the funds’ sponsor and has therefore affirmed these funds’ ratings at ‘AAAmmf’ and removed them from RWN.”

The agreement, according to Gordon J. Ceresino, president of Federated International Management Limited “will incorporate Prime Rate Capital’s experienced team, insightful processes and excellence in liquidity management into Federated’s money market business – with euro, sterling and dollar-denominated UCITS products positioning us for future growth”.

David Royds, chairman and co-founder of Matrix Group, added: “Since its launch in 2007 we have very successfully built Prime Rate into one of the UK’s fastest-growing and best-performing institutional cash management businesses, and this transaction represents an important milestone for Matrix and Prime Rate.”

According to iMoneyNet, Federated has 12% of the U.S. market share of AAA-rated money market funds and is the second-largest U.S. manager of money funds of the highest credit quality.

Dennis Gepp, managing director and chief investment officer of Prime Rate Capital said: “We opted to join Federated because of the company’s reputation as a premier global liquidity manager since the 1970s”.

For the foreseeable future the Prime Rate team will continue to be located in the London offices of Matrix Group.