Hedge fund managers are exploiting the post-crisis period to find both buyers and sellers, as well as talented investment and client service teams.
Managers of hedge funds and funds of funds are holding court, considering minority, majority and 100% stake offers from a wide variety of financial services companies and private equity managers that have been actively pursuing acquisitions since the summer, confirmed Daniel Celeghin, a partner at Casey Quirk & Associates LLC, Darien, Conn., a consultant to money managers.
Eric C. Weber, managing director and chief operating officer of investment bank Freeman & Co. LLC, New York, agreed: “The level of discussion has been picking up in the last few months, now that it's clear who survived the storm. More conversations now likely will lead to more deals next year.”
A number of broad needs are driving what sources call a significant increase in activity by both sellers and buyers: cash for business growth; new investment strategies; investment and institutional marketing talent in new geographic areas; and expertise in specific investment strategies.
Larger hedge fund managers, including York Capital Management Global Advisors LLC, are motivated to sell stakes by the desire for cash infusions or to tap into a larger company's distribution network.
York Capital, an event-driven and credit-focused specialist with $14 billion under management, accepted Credit Suisse Asset Management's offer of an initial $425 million for a minority stake. Terms were not disclosed.
Other hedge fund managers, like Polar Capital Partners Ltd. and FrontPoint Partners LLC, that maintain multistrategy platforms to which investment teams are added through liftouts or acquisitions, are taking advantage of the current desire by investment teams or smaller hedge fund companies to find a strong partner.
“There are huge opportunities right now to hire portfolio managers and investment teams we wouldn't have been able to touch pre-2008,” said James Brandt, sales and marketing director of Polar Capital in London.
In just the last two months, Polar Capital acquired HIM Capital Holdings Ltd., which manages $230 million in a specialist financials sector fund; added a global emerging markets investment team through the liftout of a team from AXA Framlington; and formed a global convertibles team through the hire of a team from Vicis Capital LLC.
Polar Capital managed $3.1 billion as of Oct. 31, 35% of which was from institutional investors.