Nexar Capital Group will acquire hedge fund-of-funds manager Ermitage from Caledonia Investments, confirmed Arie Assayag, Nexar’s founding partner and CEO.
Terms of the acquisition, which is subject to regulatory approval, were not disclosed.
In a joint telephone interview, Mr. Assayag and Ian Cadby, Ermitage’s CEO, said the investment teams and operations of the two firms will be integrated and manage a total of $3.7 billion at the outset. Mr. Assayag said all of Ermitage’s senior management signed long-term contracts and will receive an equity stake in Nexar. Staff layoffs are not planned.
Ermitage manages about $1.2 billion for a client base that is more than 95% institutional, including $134 million in a customized European hedge fund of funds for the $230.1 billion California Public Employees’ Retirement System, Sacramento.
Ermitage’s specialization in creating customized hedge funds of funds for institutional clients makes the merger of the two companies “attractive … and accretive for our clients,” Mr. Cadby said.
Nexar specializes in managing commingled hedge funds of funds, which was augmented through the September 2010 acquisition of Allianz Alternative Asset Management, Mr. Assayag said. Over time, the commingled funds of each company might be merged, while the customized separate accounts will not change.
Mr. Cadby stressed that “culturally and philosophically, the two teams are very close,” with shared backgrounds on the derivative desks of investment banks providing a strong quantitative background.
Jamie Cayzer-Colvin, executive director of Caledonia Investments, said in an interview that a buyer had been sought for some time to help Ermitage grow its asset base. “We think the offer that Nexar made represents a very appropriate deal for Ermitage and we wish them luck,” Mr. Cayzer-Colvin said.