CIBC on backburner in bidding war for Russell Investments

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Canadian Imperial Bank of Commerce's chances of scooping up a sizeable U.S. asset manager are slipping away.

CIBC is in the running to acquire Seattle-based Russell Investments, which was put on the auction block earlier this year. The sale process is coming to a close, however, and the Canadian bank is no longer among the top candidates, according to someone familiar with the process.

Shortly after Russell was put up for sale, CIBC and some private equity firms were reported to be interested, but the London Stock Exchange has since entered exclusive talks with Russell, according to the Financial Times.

Russell has been looking for a bidder who will buy the entire company, but CIBC was interested in scooping up Russell's straightforward asset management arm and letting someone else take the rest of the business, said the source close to the process.

Russell, which is currently owned by Northwestern Mutual Life Insurance, has three business lines – consulting, money management and indexing.

Through its consulting arm, Russell advises pension funds and institutions on matters such as portfolio manager selection. The business is in heavy demand, because many big firms are outsourcing the role of chief investment officer to consultants.

The money management business is the most similar to that provided by straightforward asset managers. However, instead of constructing portfolios based on strategies (U.S. equities, etc.), investors who put money into Russell's portfolios are really buying funds based on who their managers are.

Russell also makes money from constructing indexes such as the Russell 2000, the leading U.S. small-cap index, which are often used for benchmarking purposes by hedge funds and exchange-traded funds.

LSE is reportedly looking at a deal for Russell worth $3-billion (U.S.), according to the FT, a sum similar to what was reported when CIBC and private equity firms were first circling the company.