New York-based BlackRock, a publicly traded investment management firm with more than $1 trillion (€743 billion) in assets under management, has agreed to buy Quellos Group’s fund of funds business in a $1.7 billion transaction. Quellos had more than $20 billion in assets managed across its alternative investment products in the first quarter of 2007.
Under terms of the agreement, BlackRock will pay Quellos $562 million in cash, and $188 million in stock. Additionally, Quellos may receive up to $970 million in cash and stock over a three-and-a-half year period “contingent on certain measures”, the firms said in a statement. “A substantial portion of after-tax cash proceeds will be reinvested for ten years in products managed by the fund of funds investment professionals,” the statement said.
Founded and led by former Blackstone partner Lawrence Fink, BlackRock’s fund of funds platform – including private equity, hedge, real assets, and hybrid offerings – will have more than $25.4 billion in assets following the transaction’s expected close on or around 1 October 2007.
“Following closing, we will combine our hedge and private equity fund of fund activities on a unified platform,” Fink said in a statement.
The new platform, BlackRock Alternative Advisors, will be led globally by Bryan White, Quellos’ chief investment officer, but investment strategies will not be altered, and existing portfolios will retain their management teams.
Russ Steenberg will continue to lead BlackRock’s exisiting private equity fund of funds team, while Gene McDonald will continue to lead the Quellos private equity fund of funds team.
Jeffrey Greenstein, Quellos CEO and co-founder, will retire post-transaction.