Massachusetts-based asset management firm MFS Investment Management (MFS) has ended its distribution arrangement with BNP Paribas Investment Partners in Australia and New Zealand, citing its size as the main reason for the break-up.
From July 2012, MFS will shift to direct distribution of its investment products and services, establishing its own sales and service staff alongside its existing local investment group in Sydney.
"MFS' decision to establish its own local distribution team reflects the natural evolution of its business and the desire to have a more direct relationship with clients in the region," the company said in a statement to InvestorDaily.
"This model mirrors that of MFS' other major regional distribution and investment offices throughout the world including Boston, London, Singapore, Tokyo and Toronto."
The companies said the split was amicable, but the end of the relationship takes away a significant slice of BNP Paribas IP's Australian distribution business.
The MFS Global Equity Trust had $3.2 billion in funds under management from Australian and New Zealand investors as at the end of February this year.
MFS plans to establish its own offices in Melbourne and Sydney, but could not yet indicate whether it would hire any BNP Paribas IP staff for its business development, marketing and client services teams.
"We are not yet at liberty to announce MFS team members but anticipate being able to do so in the coming weeks," an MFS spokesperson told InvestorDaily.
He said the firm does not expect any client losses over the transition.
"Overall we anticipate clients will view this as a positive development, furthering MFS commitment and enhanced interaction with clients in the region," he said.
The split comes shortly after BNP Paribas IP chief executive officer Robert Harrison left the Australian office to head up the United States-based business.
He was replaced by the firm's co-head of institutional business development David Grybas.
Grybas was not available for comment however BNP Paribas IP did issue a statement reaffirming its commitment to further developing its asset management business in Australia and New Zealand.
As part of its commitment, the firm plans to widen its product offering by partnering with other international equity managers.
"BNPP IP will maintain its successful business model of open architecture distribution and will continue to represent best of breed fund managers across all major asset classes," the firm said.
Many multi-manager companies have mandates with MFS, including Advance, Colonial First State and IOOF, but the transaction is expected to have little impact on their funds, as most have direct mandates with the firm.
BNP Paribas IP Australia has distribution arrangement with Antin Infrastructure Partners, Arnhem Investment Management, BNP Paribas Asset Management, Fauchier Partners, Fischer Francis Trees and Watts, Impax and Overlay Asset Management.
