Funds managed by Fidelity Investments are in talks to buy a minority stake in investment advisory firm StepStone, according to people with knowledge of the matter.
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The new open architecture platform will minimize the “swivel chair experience” for advisors.
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The updates include access to the ultrahigh-net-worth portfolio management and customer relationship management systems.
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The firm expects shareholders will save an estimated $3.2 million, annually.
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A deal, which would precede a potential initial public offering of StepStone as soon as 2020, is not certain, said the people, who requested anonymity because the talks are private. Representatives for Fidelity and StepStone declined to comment.
Although many underperformed the broader market, just over half posted double-digit gains.
New York-based StepStone, led by CEO Monte Brem, oversees more than $260 billion in asset allocations on behalf of clients including domestic and offshore pension funds, and has more than $52 billion in assets under management, according to its website.
It’s not unusual for asset managers to accept institutional investments before an IPO. In 2003, Hamilton Lane sold an ownership position to Cascade Investment, the personal investment arm of Bill Gates. In 2015, Hamilton Lane repurchased that stake and went public two years later. Its stock has more than tripled to more than $54 a share from its $16 debut.
In a similar deal, Apollo Global Management sold a stake to California Public Employees’ Retirement System and the Abu Dhabi Investment Authority in 2007, before going public in 2011.
StepStone tailors portfolios for clients and often combines fund commitments with co-investments, in which pensions and sovereign wealth funds directly invest in deals alongside the funds they back, enabling them to reduce overall fees.
