In an effort to access private equity investments, Affiliated Managers Group Inc. announced the largest deal in its 17-year history Wednesday when it said it would buy Pantheon Ventures from Russell Investments, a unit of Northwestern Mutual Life Insurance Co.
Pantheon, which has offices in London, San Francisco, New York and Hong Kong, is a global private equity fund-of-funds manager that has offered investment products to a range of clients for over 25 years. It manages regional funds-of-funds in Europe, the United States and Asia , as well as global secondary funds-of-funds, global infrastructure fund-of-funds and customized separate account programs.
Pantheon, which employs 63 investment professionals of its 141 employees, manages approximately $22 billion for over 300 global clients, including pension funds, endowments, government bodies and insurance companies. Russell will continue to offer and distribute Pantheon’s products.
Boston-based AMG [AMG] will pay $775 million in cash with the potential for additional payments over the next five years, contingent on Pantheon’s growth. AMG said that when the deal closes in the second quarter Pantheon’s management would own a “meaningful stake” in the company and continue to run the firm.
AMG is a global asset manager that owns a stake in a series of boutique investment firms internationally. Its strategy enables each affiliate’s management team to own a portion of their firm and handle day-to-day operations. As of Dec. 31, AMG’s affiliates had $253 billion in assets under management.
During a conference call Wednesday, Sean M. Healey, AMG’s president and chief executive officer said the acquisition was made because private equity is an “extraordinarily attractive sector” during the current market cycle.
“Private equity is a core element of institutional investors’ overall asset allocation, and we believe that the asset class will continue to produce superior returns and attract new clients worldwide,” he said. “We view the fund-of-funds structure as an especially attractive way to participate in this important asset class, given the stability and consistency of its revenue stream, as well as the scalability of its investment platform.”
The acquisition should almost complete a seven-month buying spree for AMG during which time it made five deals. Healy said AMG “plans more accretive new investments going forward.” He said though the company has a strong pipeline, there are no immediate expectations for another deal.
Earlier this month, the company announced it bought a stake in Artemis Investment Management Ltd. from BNP Paribas’ Fortis Bank. That deal is expected to close at the beginning of the second quarter.
“With [Pantheon] and Artemis, we are well positioned across global equity products for the future,” Healey said.
Healey said the company remains positioned for more acquisitions of this size in the future and we may find acquisitions that are larger than this. Our focus is on the quality of the management team that we partner with.”
AMG holds stakes in money managers, including Third Avenue Management, Tweedy Browne Co., and AQR Capital Management.