Morgan May Seek Partner for Van Kampen

NEW YORK (TheStreet) -- Speculation continued to mount on Wednesday over Morgan Stanley's (MS Quote) plans for its Van Kampen mutual fund business, with a report that the firm may seek a joint venture rather than sell it outright.

The Wall Street firm has reportedly been shopping around Van Kampen to several interested buyers because of competitive pressures. But instead of selling Van Kampen, Morgan Stanley may pursue a strategic partnership, perhaps similar to that of BlackRock(BLK Quote) and Bank of America(BAC Quote), according to a report in the Wall Street Journal, citing anonymous sources.

Morgan Stanley would then be able to maintain a minority interest but allow a more experienced retail-fund manager to cope with Van Kampen's problems. Morgan Stanley is more focused on another joint venture -- a majority stake of high-net-worth brokerage Smith Barney, which it bought from Citigroup(C Quote) earlier this year.

Van Kampen manages under $100 billion in assets, a fraction of what larger firms like BlackRock, Fidelity or Prudential run. It lost money last year during market stress and has had net outflows for 10 quarters.

Van Kampen has traded hands several times throughout its history, and is now valued at about $1 billion, the Journal said. The estimate is not much more than what Morgan Stanley paid to acquire the business 13 years ago.

Potential partners in the deal could include Invesco(IVZ Quote), Franklin Resources(BEN Quote), Aberdeen Asset Management, Federated Investors (FII Quote) and Nuveen Investments, the Journal said.

-- Written by Lauren Tara LaCapra in New York.

Follow TheStreet.com on Twitter and become a fan on Facebook.