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Ahead of the official sale of Cincinnati Southern Railway to Norfolk Southern for $1.6 billion in March, the city commission that oversees the railroad narrowed the list of potential fund managers from 17 companies to five.
The Cincinnati Southern Railroad Commission plans to interview the five companies at a public meeting Wednesday at 950 Eden Park Drive starting at 1 p.m.
Two local companies were named to the list: Fifth Third Bank and FEG Investment Advisors.
The selection was made last week at a public meeting at the Walnut Hills branch of the Cincinnati-Hamilton County Public Library. The board paid private consultants to evaluate the 17 bidders, but those scores were only part of the scores the board used to select the list.
Ascension Wealth Management of Sycamore Township was the only minority firm to bid to manage the fund, but it was not on the shortlist of companies to be interviewed.
Although it came in last place in a private consultant’s evaluation of suitability to the board’s requirements, it also had the smallest customer portfolio among the bidding companies.
The Cincinnati South Railroad Commission, which oversees the railroad and the trust after the final sale, is selecting the fund manager. Members are a distinct minority in participating in trust fund management, but last week’s discussion to narrow down the list focused on which companies best understand the needs of the city of Cincinnati and which board members have the greatest The question was whether to present a plan that they thought would be profitable. Nation.
The scoring took into account experience, size, price, strategy, responsiveness, and underrepresentation.
Cincinnati Railroad Sales: How We Got Here
The board agreed last year with the approval of Cincinnati voters to sell the 143-year-old city-owned railroad rather than continue to lease it to Norfolk Southern. The $1.6 billion proceeds from the sale will be placed in a trust fund from which investment proceeds will be used to repair current city infrastructure. The trust is expected to bring at least $56 million a year to the city’s budget, as opposed to the lease, which currently provides about $26.5 million a year.
The lease was scheduled to expire at the end of 2026, so sales negotiations began.
The board oversees the fund manager and determines the amount donated to the city each year based on trust income.
The board hired Davenport & Company, a Virginia-based wealth management firm it has worked with in the past, to evaluate the company. Bids are private under Ohio law, but Davenport’s two vice presidents outlined their findings at last week’s board meeting and shared the scoring system they provided to the board. The fees charged by each company were also discussed, but the amount was not shared at the meeting.
That information should be made available to successful bidders.
Also unable to participate was Marquette Associates, which manages the city’s pensions. Although it was in the top five in terms of score, board member and former Cincinnati Mayor Charlie Luken said it was important to keep trust management and city business separate.
5 finalists
The rankings are based on a private consultant’s assessment of how the company complied with bidding requirements set by the Cincinnati Southern Railroad Commission. Seventeen companies bid to manage the trust, and consultants gave each one a score, with the highest being 91.25% and the lowest being 47.92%. Two companies were ranked 4th with the same score, and 2 companies were ranked 5th with the same score.
fifth third
- Founded: 1858.
- Location: Cincinnati.
- Assets under management under advice: $12 billion (Institutional Services)
- Consultant score: 12th place.
Fund evaluation group (FEG) investment advisor
- Established: 1988.
- Location: Cincinnati.
- Assets under management under advice: $73.8 billion.
- Score: 9th place.
UBS Financial operations
- Founded: 1862.
- The company is headquartered in Zurich, Switzerland, but has offices around the world, including a Cincinnati office with 236 employees.
- Assets under management: $91 billion under management, of which $17 billion is public funds.
- Score: 5th place.
northern trust
- Founded: 1889.
- Location: Chicago.
- Assets under management under advice: $124 billion.
- Score: 7th place.
NEPC LLC
- Established: 1986.
- Location: Boston.
- Assets under management under advice: $1.5 trillion.
- Score: 2nd place.
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