US/UK - Russell Investments has sold Pantheon Ventures, its US$22bn private equity fund of funds manager, to Affiliated Managers Group for around $775m.
Under the terms of the deal, Russell will also have the potential for additional payments over the next five years, contingent on the growth of Pantheon's business.
AMG said following the closing of the transaction, Pantheon's management team will own a "meaningful stake" in the partnership and continue to direct the firm's day-to-day operations. Twenty one management partners of Pantheon will enter into long-term employment agreements with the firm.
Russell's clients will still have access to Pantheon's products through a distribution agreement between the firms.
AMG said the transaction will be funded using a combination of AMG's available cash and existing credit facility.
AMG president and chief executive Sean Healey said: "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.
"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."
In 2008, Russell wound down parts of its hedge fund of funds business, but the firm said selling its private equity business does not mean it is completely stepping away from the alternatives space.
Russell spokeswoman Jennifer Tice said selling Pantheon "allows Russell to have an added focus on some of our strategic initiatives" including indexing, traditional and alternative fund business, and particularly consulting.
Tice said the firm is currently considering candidates for a handful of senior alternative investment consulting roles to be based in the US and overseas. The firm is also looking for alternative investment research analysts to work alongside the consultants, a new position for the firm.
The transaction, which is expected to close during the second quarter of 2010, is subject to customary closing conditions and regulatory approvals.
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