Madison Dearborn seals $6.25bn exit

The firm is expected to break even on its 2007 investment in Nuveen Investments.

Madison Dearborn Partners will sell Nuveen Investments to TIAA-CREF for $6.25 billion, according to a statement.

Madison Dearborn led an investor group in the $6.3 billion take-private of Nuveen in June 2007, including existing debt of $550 million, according to a prior statement. According to media reports, Madison Dearborn paid a total of $5.27 billion in the take-private transaction and is expected to break even on the sale. Nuveen made several investments under Madison Dearborn’s control and the firm may receive all of Nuveen’s balance sheet cash. However, Nuveen’s debt load is reportedly $1.5 billion larger than at the time of Madison Dearborn’s investment, and the Nuveen’s cumulative losses stand at about $2.4 billion.

Nuveen Investments provides investment services to institutional and individual investors, consultants and financial advisors and has $221 billion of assets. The acquisition will expand TIAA-CREF’s retirement and financial services business, bringing the firm’s total assets under management to about $800 billion. The transaction is expected to close by the end of 2014.

“Nuveen's strong distribution network will give us growth and scaled presence in several important channels through relationships built around experienced investment managers with strong track records,” Robert Leary, executive vice president of TIAA-CREF and president of TIAA-CREF asset management, said in the statement.

Nuveen will operate as a separate subsidiary within TIAA-CREF’s asset management business. The company’s leadership and investment team will also remain intact and chief executive officer John Amboian will retain his role.

Madison Dearborn funded the acquisition with its $6.5 billion Fund V, a 2006 vintage. The Chicago based firm hasn’t been in the market with a fund since it closed its Fund VI on $4.1 billion in 2008. Fund VI had a $7.5 billion target, according to Private Equity International’s Research and Analytics division.