BOSTON -- Private equity firm TA Associates Inc. has bought 40% of ValueQuest Ltd., the Marblehead, Mass., equity money management firm run by Katherine Busboom Magrath.
Officials were mum about financial details. The firm could be worth $30 million, with the TA deal accounting for $12 million, according to outside estimates based on ValueQuest's fee structure.
ValueQuest is a contrarian value manager with $1.5 billion in equity assets under management, almost all of it U.S. institutional tax-exempt in primarily domestic securities. Its large pension fund clients include the California Public Employees' Retirement System, with a $400 million mandate, and the State of Connecticut Retirement and Trust Funds, with a $200 million portfolio.
The firm will be renamed ValueQuest/TA and will remain in Marblehead. Investment professionals and support staff remain unchanged.
TA Associates Vice President Greg White said this type of partnership is not common for Boston-based TA, which provides private equity capital for the financial services industry. Over the years, TA's transactions have been structured many ways, most often as support for growing firms rather than an engagement of this kind. TA provided capital for Affiliated Managers Group Inc., which had an initial public offering last fall, and recently bought a minority stake in Toronto-based Altamira Investment Services Inc..
"This isn't an acquisition. It's a strategic relationship. . . . but ValueQuest/TA will be autonomous," Mr. White said.
The former executive director of the Massachusetts Pension Reserves Investment Management Board joined TA last fall to create such partnerships. He will become chief operating officer of ValueQuest/TA.
ValueQuest officials rejected other offers in recent years.
"With many of them, we would have had to change our culture," said partner Terrence Magrath.
The TA partnership provides more than capital, according to the Magraths. ValueQuest will introduce clients interested in private equity investing to TA, they said. TA can direct private equity investors to ValueQuest for international or domestic equity investing. And the two entities will share in-depth research.
Ms. Magrath said the 18-year-old firm's process is strong, clients are loyal and assets keep growing. But ValueQuest needed to become more robust, gain depth and expand more into international and global investing, the partners said.
