Twin Cities back on map as large-cap growth center

New York Life Insurance Company takes stake in Cornerstone for undisclosed amount

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Once regarded among the top five financial centers for large-cap growth managers, the Twin Cities of Minneapolis and St Paul have weathered several years of seeing those assets move to other money centers around the US, particularly Boston and Chicago.

But there are signs the upper Midwest metro area is reasserting itself as a ‘must-stop’ for IROs and management, particularly those with a growth story for institutional money managers.

Last week, New York Life Insurance Company (NYLIC), through its institutional investment management subsidiary Madison Square Investors, took a 31.5 percent stake in Twin Cities-based large-cap growth fund Cornerstone Capital Management for an undisclosed amount.

The Cornerstone story illustrates the fierce competition for institutional assets in recent years. Since former AllianceBernstein star Tom Kamp moved to Cornerstone in 2006, the firm has grown from $100 mm to $2.7 bn in assets under management. Given that organic growth, Kamp tells IR Magazine: ‘What we really need now is a distribution partner.’

In addition, Cornerstone also immediately gains $11 bn in assets. As part of the deal, NYLIC will put approximately $1 bn in assets into Kamp’s hands, plus $10 bn of assets in the former Madison Square subsidiary, run under quantitative, index and international strategies, will now fall under Kamp’s oversight as chief investment officer.

The NYLIC investment echoes the move in 2008 of another Twin Cities money manager, Clark Winslow, who sold his firm, Winslow Capital Management, to Chicago-based Nuveen Investments. At the time, Winslow managed just north of $4 bn. By the end of 2012, boosted by Nuveen’s distribution capability, it reached more than $36 bn.

‘I’ve seen this movie before. This is exciting!’ Kamp enthuses about the Twin Cities resurgence as a major money center for large-cap growth. This resurgence complements the region’s reputation at the other end of the spectrum.

Brian Matt, director of data strategy and analytics for Ipreo, says he sees ‘a concentration in Minneapolis of small-cap growth investors’ such as Next Century, Sit Investment Associates, Peregrine Investments and Disciplined Growth Investors.

The Twin Cities ranks number eight overall in the US for assets under management and number 17 globally, with more than $220 bn run by investors, according to Ipreo.