Morgan Stanley announced Tuesday that it has reached an agreement to acquire FrontPoint Partners, a $5.5 billion hedge fund that specializes in absolute returns. Morgan expects to close on the deal in December. The company didn’t disclose what it is paying for the firm but said that it plans to continue to expand its alternative investments capabilities.
On Monday, the company revealed it is acquiring a stake in $12 billion hedge fund firm Avenue Capital.
FrontPoint’s investment teams will continue in their positions and assume leadership roles at Morgan once the acquisition is complete. They will also invest a “significant” amount of the proceeds from the deal in the firm’s funds.
Gil Caffray, managing partner, will become vice chairman of Morgan Stanley Investment Management. Mike Kelly, a partner and head of manager selection, will become the head and chief investment officer of Morgan Stanley Investment Management’s absolute return strategies group. Arthur Lev, partner and general counsel, will become general counsel for Morgan.
Joanne Pace, partner and COO, will remain COO, and Daniel Waters, partner and head of the client advisory group, will become head of U.S. institutional distribution. Finally, Philip Duff, chairman, will become a consultant to Morgan Stanley working on firm strategy, and Paul Ghaffari, founding partner, will establish his own independent investment firm.
“The addition of FrontPoint, with its outstanding track record, management and investment talent, substantial assets under management and sizeable institutional client base, gives us the strong foundation we need to pursue our ambitious growth plans in alternative assets,” said Owen Thomas, chief operating officer of MSIM, in a statement.