New York Life Investments said Thursday it signed an agreement to acquire a majority stake in Private Advisors, LLC, a fund of hedge funds manager based in Richmond, Virginia with $3.9 billion in assets.
Private Advisors is led by founder and managing partner Louis Moelchert, Jr, who prior to the creation of the firm managed the endowment for the University of Richmond for over 25 years. The endowment first put money to work into alternative investments in the early 1980s.
“Private Advisors has a long history of delivering risk-adjusted investment returns, with a strong focus on capital preservation. The firm has a well-defined investment process that incorporates investing in alternative investment managers with proven track records,” John Kim, president and chief executive officer of New York Life Investments, a unit of insurer New York Life Insurance Co., said in a press release.
The deal is yet another example of consolidation in the hedge fund industry as the very largest firms continue to attract the bulk of new money. Industry observers say pension funds and endowments feel more comfortable investing alongside their peers in firms backed by large financial institutions.
In the second quarter, nearly all of the $23 billion of new money that entered the industry went to firms with more than $5 billion of assets under management, according to data from Hedge Fund Research. These firms now control about 60% of the total industry capital
At closing, New York Life Investments will acquire a 60% ownership interest in Private Advisors and Private Advisors’ equity holders will retain the remaining 40%. A significant portion of the equity holders’ proceeds will be re-invested in Private Advisors’ funds alongside its clients.
"This is a great opportunity for our clients and our firm. New York Life Investments’ multi-boutique investment structure will enable Private Advisors to preserve its long-standing investment philosophy, its experienced investment team and capabilities – all while benefitting from the resources of one of the most reputable financial institutions in the world," Moelchert said in the release.