Hewitt deal creates $3tr firm hungry for alternatives

Hewitt Associates’ plan to acquire EnnisKnupp will build out the firm’s investment consulting business, advising LPs on private equity, real estate and infrastructure investments.

Hewitt Associates has marked its US entry into the alternative investment consulting world with its planned acquisition of EnnisKnupp. Hewitt and EnnisKnupp, both US-based firms, share a similar client base, large institutional investors, but they provide different services.

Hewitt Associates, based in Illinois, is best known for providing LPs with administrative services including record keeping and human resources outsourcing services.

EnnisKnupp, however, has been active in the private equity sector since the late 1980s. The private equity team annually deploys over $1 billion of committed capital across primary partnerships, secondary investments, funds-of-funds, and co-investments, said an EnnisKnupp spokesperson. The Chicago-based firm provides advisory services, including leveraged buyout, growth equity, venture capital, distressed debt, mezzanine, infrastructure, secondary, and fund-of-funds.

The merged firm would have $3 trillion in assets under advisement.

EnnisKnupp has spent the past five years expanding its expertise in alternatives, including private equity, real estate, infrastructure and hedge funds, which is very attractive to Hewitt, a spokesperson said.

If the deal goes through, Hewitt will take on a number of large public pension fund clients from EnnisKnupp, which has played a significant role in beefing up US public pension fund exposure to alternatives.

In June, the $109 billion Florida Retirement System announced it will invest in infrastructure for the first time, following an asset liability study from EnnisKnupp. The pension fund will invest 2 percent of assets in the asset class.

In April, EnnisKnupp recommended that North Carolina Retirement Systems raise its private equity allocation for its $68 billion pension fund. According to the consultant’s asset liability study, the system's target allocation of 3.5 percent of assets for private equity is low compared to similar-sized US public pension plans.

EnnisKnupp also advises the $10 billion Arkansas Teachers Retirement System, the $82 billion New York State Teachers’ Retirement System, and the $44 billion Massachusetts Pension Reserves Investment Management Board.

The deal marks the second for Hewitt Associates in eight days. On 12 July, Aon announced it will acquire Hewitt for $4.9 billion in cash and stock. The proposed deal would expand Aon’s human resource consulting and outsourcing capabilities. Aon provides risk management services, insurance and reinsurance brokerage and human capital and management consulting.