TA and Reverence to acquire Russell for $1.1bn

TA Associates and Reverence Capital Partners have agreed to acquire Russell Investments from the London Stock Exchange Group for $1.1 billion.

Reverence Capital will make a “significant minority investment” in Russell that has $266.1 billion of assets under management, according to a statement.

Russell Investments is an investment management, securities indexes and advisory services business headquartered in New York.

“We believe that the breadth of Russell Investments’ investment and implementation operations will continue to be a differentiator and driver of growth in the marketplace going forward,” said Todd Crockett, a managing director at TA Associates.

TA launched fundraising for its TA XII fund in January, targeting $4 billion. As of July, the Massachusetts firm had amassed $5.3 billion and was close to finishing the fundraising, as reported by Private Equity International.

The LSE announced its intention to sell Russell Investments in February. Strategic buyers Towers Watson & Company, Shanda Games and Chinese state-owned conglomerate CITIC Group were reported to be bidders for Russell Investments.

Russell Investments also oversees a fund of funds that invests in third party-managed private equity partnerships, as well as provides consultancy services. 

“Russell Investments represents a compelling opportunity to invest in a large-scale, diversified, global asset manager,” said Milton Berlinski, managing partner at Reverence Capital. “We believe the company is well positioned to take advantage of the rapid globalization of investment management and changing forms of distribution.”

As part of the deal, Berlinski will sit on Russell Investments’ board along with Crockett and TA managing director Roger Kafker.

Len Brennan, president and CEO of Russell Investments who will also join the board, said: “TA Associates and Reverence Capital’s investment represents “a notable endorsement” and provide the company with “strategic guidance and industry expertise.”

For TA, a long time investor in financial service companies, the deal represents is its seventeenth in the sector.

Former Goldman Sachs global financial sponsor head Berlinski and securities partner Peter Aberg, and ex-General Atlantic managing director Alexander Chulack established Reverence in June 2013 to focus on investing in mid-market financial services businesses.

Goodwin Procter LLP is serving as counsel to TA and Reverence, while Freshfields Bruckhaus Deringer is acting counsel to LSE.

Broadhaven Capital Partners provided financial advice to TA and Reverence Capital.