In the largest deal in its 17-year history, Affiliated Managers Group Inc. is buying Pantheon Ventures from Russell Investments, a unit of Northwestern Mutual Life Insurance Co.
AMG, a global asset manager in Boston that owns stakes in a series of boutique investment firms internationally, will pay $775 million in cash with the potential for additional payments over the next five years, contingent on Pantheon's growth. AMG said that when the deal closes in the second quarter, Pantheon's management would own a "meaningful stake" in the company and continue to run the firm. The deal was announced Wednesday.
Pantheon, which has offices in London, San Francisco, New York and Hong Kong, is a global private-equity funds-of-funds manager that has offered investment products to a range of clients for more than 25 years. It manages regional funds of funds in Europe, the U.S. and Asia as well as global secondary funds of funds, global infrastructure funds of funds and customized separate account programs.
Pantheon employs 63 investment professionals out of its 141 employees, and manages approximately $22 billion for more than 300 global clients, including pension funds, endowments, government bodies and insurance companies.
Russell will continue to offer and distribute Pantheon's products.
AMG's strategy enables each affiliate's management team to own a portion of their firm and handle day-to-day operations. At Dec. 31, AMG's affiliates had $253 billion of assets under management.
During a conference call Wednesday, Sean M. Healey, AMG's president and chief executive said the deal was made because private equity is an "extraordinarily attractive sector" during the current market cycle.
"Private equity is a core element of institutional investors' overall asset allocation, and we believe that the asset class will continue to produce superior returns and attract new clients worldwide," he said. "We view the fund-of-funds structure as an especially attractive way to participate in this important asset class, given the stability and consistency of its revenue stream as well as the scalability of its investment platform."
The deal should somewhat complete a seven-month buying spree for AMG, during which it struck five deals. Healey said AMG "plans more accretive new investments going forward." He said there are no immediate plans for another deal.
Earlier this month, the company announced it bought a stake in Artemis Investment Management Ltd. from BNP Paribas' Fortis Bank. That deal is expected to close at the beginning of the second quarter.