LONDON (HedgeWorld.com)--Schroders plc is significantly expanding its hedge fund business through the acquisition of NewFinance Capital, which has US$2.5 billion across six funds of hedge funds.
Schroders executives announced the acquisition yesterday (Feb. 21) in the company's earnings results, saying the acquisition price would total US$101 million initially with another US$41 million payment contingent on revenue growth over the next four years.
As of the end of September, Schroders had US$1 billion in individual hedge funds and multi-manager hedge funds, a figure that slipped to US$700 million as of year-end. The asset management company's hedge fund program began in 2000 with the launch of a commingled multi-manager fund of hedge funds and an individual hedge fund.
The merged hedge fund business will operate under the NewFinance Capital brand.
NewFinance is known for its Opus funds that invest in a wide variety of strategies. Marc Hotimsky and George Saier started the firm in 2002. Half of NewFinance's investment portfolio is fixed-income oriented, with two relative value focused fixed-income products and a third fund that allocates exclusively to credit hedge fund strategies.
Another fund invests solely in commodity hedge funds and an equity offering gives investors access to equity-only strategies such as short selling and long/short equity. NewFinance also offers a multi-strategy fund that can invest in any type of hedge fund strategy.
Schroders has been looking to build on its hedge fund business in the past year. Officials inked a deal with Integra Capital last spring to distribute three of Schroders' funds of hedge funds to Canadian institutional investors. The agreement was the first time the U.K.-based company arranged for distribution of its hedge fund products in North America.
The NewFinance deal also will help to diversify Schroders' clientele to include more private banking operations and pension funds. NewFinance also offers advisory services and managed accounts, according to its web site.
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