Robeco Group is handing over control of Robeco-Sage, its hedge fund-of-funds business, to Arden Asset Management in exchange for a 10-year revenue share, confirmed Katherine J. McMillan, a Robeco Group spokeswoman.
Cash is not being exchanged in the deal, which is expected to close Oct. 1. Further details about the revenue share are not being disclosed, Ms. McMillan and Averell Mortimer, Arden's president and CEO, said in separate interviews.
About half of Robeco-Sage's $1.3 billion hedge fund-of-funds assets are managed for institutional investors, Ms. McMillan said.
Arden's $7.2 billion in commingled and customized hedge funds of funds is managed for a client base that is 80% institutional, Mr. Mortimer said.
As part of the deal, Robeco-Sage employees Paul Platkin, chief investment officer, and Darren Wolf, head of research, will join Arden Asset Management. Mr. Platkin will remain CIO of the Robeco-Sage hedge funds of funds and Mr. Wolf will become managing director focused on manager research for the Robeco-Sage funds, Mr. Mortimer said.
Henry Davis, an Arden managing director, said in an interview that Robeco-Sage's hedge fund-of-funds investment strategy is oriented toward long/short equity with a higher beta and higher volatility than Arden's. Arden portfolio managers are more focused on event-driven and relative value managers offering lower beta and volatility, Mr. Davis said.
The two investment approaches offer “very different return profiles and that broadens Arden's scope,” Mr. Davis said, noting that there are no plans to merge the two hedge fund-of-funds families. In fact, he said being able to draw on Robeco-Sage's investment strategy will be “significantly additive” when it comes to building customized hedge fund-of-funds portfolios for institutional investors.
“We believe this transaction provides significant benefits to our investors through increased resources, including investment talent, leading-edge technology and infrastructure. We remain committed to the fund-of-funds business and intend to retain our substantial investments in the Sage funds,” said Roderick Munsters, CEO of Robeco Group, in a news release.
Mr. Mortimer added: “We are very positive about the addition of Robeco-Sage to Arden's business. We are committed to the hedge fund-of-funds business as our sole focus and to remaining an independent, employee-owned firm. These new funds will help us expand our business.”