TIAA-CREF has reached an agreement to acquire Nuveen Investments from an investor group led by private equity investment firm Madison Dearborn Partner for an enterprise value of $6.25bn, inclusive of Nuveen’s outstanding debt.

Nuveen will operate as a separate subsidiary within TIAA-CREF’s asset management business, retaining its current multi-boutique business model and continuing to support its investment affiliates through scaled distribution, marketing and administrative services.

John Amboian will remain the chief executive officer of Nuveen and the company’s leadership and key investment team will stay in place.

“The acquisition of Nuveen can generate greater returns that will benefit our customers,” said Roger Ferguson Jr, president and chief executive officer TIAA-CREF.

“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,” added Robert Leary, executive vice president TIAA-CREF and president TIAA-CREF Asset Management.

The transaction gives TIAA-CREF two mutual fund complexes with $181bn of aggregate AuM. This year, for the second year in a row, TIAA-CREF was named by Lipper as the Best Overall Large Fund Company.

Ninety eight per cent of TIAA-CREF’s mutual funds receive an overall Morningstar rating of three or more stars across all asset classes as of 31 March 2014 and 90% of Nuveen’s funds have an overall Morningstar rating of three or more stars across all asset classes.

The acquisition is expected to be complete by year-end 2014, subject to customary closing conditions.