Affiliated Managers Group and the management of London-based Pantheon Ventures will buy that firm's global private equity fund-of-funds business from Russell Investments for at least $775 million, AMG announced today.
With additional contingent payments of as much as $225 million over the coming three to five years, depending on the growth of the business, the purchase price for the acquisition, expected to close during the second quarter, will be the highest Boston-based AMG has paid since the company was founded 17 years ago.
For Pantheon, which manages $22 billion for more than 260 institutional clients, that ownership structure would be the latest permutation in the business's 28-year history. According to the company's website, Pantheon — originally formed in 1982 as the private equity arm of London-based GT Management — gained its independence through a management buyout in 1988, but later sold the business to Russell Investments in 2004.
The deal would mark “the return of Pantheon to management ownership,” with the firm's 21 partners holding 15% of Pantheon's equity and AMG owning the rest, said Jay Horgen, AMG's executive vice president of new investments, during a conference call about the transaction this morning.
Sean Healey, AMG's president and CEO, speaking on the same call, called Pantheon an “extraordinarily attractive business,” with roughly 40% of its $22 billion in committed client capital yet to be invested at a time, with the global economy emerging from a period of distress, when private equity investments have historically yielded attractive returns.
In addition, he pointed to Pantheon's global client list, with well over half of its institutional clients based in Europe and Asia, as another attraction, especially — as AMG executives noted — because private equity investments have accounted for smaller portions of their portfolios compared to their U.S. counterparts.
