Sadis & Goldberg Update – The alternative investment industry, and specifically the fund-of-funds space, seems to have reached an inflection point, as demonstrated by the recent surge in M&A activity. Based upon conversations with our clients, we expect that this trend will continue to grow. A few significant market catalysts seem to be driving consolidation.<\/p>\n
On the one hand, raising capital and building distribution systems is costly and time consuming; acquiring capital, and successful marketing and sales efforts is easier, faster and cheaper under prevailing market conditions.<\/p>\n
On the other hand, fund-of-funds’ assets under management (“AUM”) have not rebounded since the financial crisis, particularly among high-net-worth individuals. According to BarclayHedge, the fund-of-funds industry managed roughly $1.192 trillion in 2007, compared with approximately $558 billion in 2011. And the vast majority of capital inflows from institutional investors are going to the largest fund-of-funds, typically those managing $10 billion plus. In response, many mid-size fund-of-funds managers believe that their model will not survive if they do not achieve critical mass, while many smaller fund-of-funds managers feel the need to increase AUM due to increasing organizational and business cost pressures. Arden Asset Management’s, a $7.2 billion AUM fund-of-funds, recent acquisition of Robeco-Sage, a $1.3 billion AUM fund-of-funds, exemplifies this trend.<\/p>\n
Also, it is reasonable to expect more transactions between more traditional asset management and private equity firms, and fund-of-funds in the coming months. This trend primarily is occurring because non-bank entities are taking advantage of the opportunity presented to them by banks shedding assets as mandated under Dodd-Frank. It recently was reported that K2 Advisors, a $10 billion AUM fund-of-funds, is in talks to be bought by suitors like The Carlyle Group, the global investment and private equity giant.<\/p>\n
In the single manager space, the same dynamics apply, but increased compliance costs and complexities, and regulatory uncertainties in the post-Dodd-Frank world also appear to be factors motivating transactions. By combining in some fashion, funds realize tremendous cost efficiencies throughout the front, middle, and back offices of their organizations. <\/p>\n
Sadis & Goldberg maintains an active Alternative Investment M&A practice. The Firm currently is advising a number of its clients on M&A transactions. Notable transactions include SkyBridge Capital’s acquisition of the fund-of-funds, hedge fund seeding, and hedge fund advisory businesses from Citi Alternative Investments LLC, and, most recently, a client’s acquisition of a significant interest in an $800 million diversified financial services company, which included a funds-of-funds.<\/p>\n","protected":false},"excerpt":{"rendered":"
Sadis & Goldberg Update – The alternative investment industry, and specifically the fund-of-funds space, seems to have reached an inflection point, as demonstrated by the recent surge in M&A activity. Based upon conversations with our clients, we expect that this […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-24147","post","type-post","status-publish","format-standard","hentry","category-press-releases"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/24147","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=24147"}],"version-history":[{"count":1,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/24147\/revisions"}],"predecessor-version":[{"id":24148,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/24147\/revisions\/24148"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=24147"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=24147"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=24147"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}