Kranefuss To Help Warburg Pincus ETF Plans
December 10, 2012
Lee Kranefuss, the former chief executive officer of iShares who stepped down from the San Francisco-based company in 2010, has joined global private equity firm Warburg Pincus to help the company’s expansion into the ETF market.
Kranefuss, as an executive-in-residence, will “work to help Warburg Pincus identify and evaluate investment opportunities in the areas of ETFs, index investing and asset management, particularly in Europe, Asia and Latin America,” the firm said in a press release.
The New York-based private equity firm, known for its focus on growth investing, manages more than $30 billion in assets. Its active portfolio includes more than 125 companies around the globe, according to information provided by the company.
"It’s a partnership that works out very well,” Kranefuss told IndexUniverse about joining Warburg Pincus. “I’ve been saying for a while that the ETF industry has become both stale and horribly fragmented, especially in some markets outside of the U.S.”
“The time is right for there to be consolidation, and those who will succeed long-term are at-scale players who can provide the right product selection, the ongoing commitment, the innovation and the support that people need," he said. "For that, you need the right management and the right capital behind it.”
Kranefuss oversaw the growth of iShares from its dawn to $600 billion in ETF assets by the time he left office in 2010 after having overseen BlackRock's acquisition of Barclays Global Investors, iShares' parent company.
“ETFs and passive investing are powerful investment tools globally, and continue to see long-term inflows,” Kranefuss said in a press release. “However, this is a time of flux and opportunity in the ETF industry."
“The time is ripe to create a large-scale, global, and independent ETF provider that will provide the truly attractive and innovative product—and the support behind it—that ETF investors demand,” he added.
The ETF industry is not in its end game, he said. It has, however, become stale from an innovation perspective, and fragmented with several players managing under $50 billion in assets.
"A free-standing ETF player that's got the right product set, the right geographic footprint, the right management team and capital behind it is a winning proposition, and I'd like to be a part of that," he said.
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