Fortis Investment Management will acquire a 70% stake in U.S. hedge fund-of-funds manager Cadogan Management. Terms were not disclosed, said Amy Rosenberg, a Fortis spokeswoman. Fortis will combine its $1.7 billion hedge fund-of-funds business with Cadogan's $2 billion operation into a single manager operating under the Cadogan name, said William Braman, U.S. CEO of Fortis, in an interview.
Fortis' hedge fund-of-funds client base is a fairly even mix of individual and institutional investors, while Cadogan's is about 90% institutional, said Ms. Rosenberg. Fortis managed e116 billion (US $147 billion) as of Sept. 30, according to a Fortis news release.
Cadogan was an attractive acquisition target because its investment focus is non-directional and market neutral, and it focuses on smaller, undiscovered hedge fund managers, Mr. Braman said. By contrast, Fortis Investment's strategy is more directional and tends to highlight larger managers, many with a macro focus. Mr. Braman stressed that there will no staff reduction because there is little overlap between the four Fortis hedge fund-of-funds strategies and Cadogan's three pooled strategies and customized separate accounts. As the combined unit begins to enhance its investment lineup, Mr. Braman said he expects more staff to be added.
Cadogan's senior managers will remain in their current positions and will be significant shareholders, according to the news release. Stuart Leaf is Cadogan's CEO and managing member; Paul Isaac is CIO; and Michael Waldron is director of research. Mr. Braman said some members of the Fortis fund-of-funds team will move to Cadogan operations: Four Fortis portfolio managers will transfer from Amsterdam to Cadogan's London office, and one Amsterdam-based portfolio manager will join Cadogan's New York operation.