Mammoth investment management firm BlackRock has agreed to buy alternative asset management shop Quellos Group for up to $1.7 billion. The combined business will comprise one of the largest fund of funds platforms in the world, with over $25.4 billion in assets under management.
Under the terms of the transaction, which has been approved by BlackRock’s board and is expected to close on Oct. 1, Quellos Group will receive $562 million in cash and $188 million in BlackRock common stock. In addition, Quellos Group may receive up to an additional $970 million in cash and stock over three and a half years contingent on certain measures.
“Following closing, we will combine our hedge and private equity fund of funds activities on a unified platform,” said Laurence Fink, BlackRock chairman and CEO. “This will bring together a strong line-up of complementary products and exceptionally talented and experienced professionals who share a commitment to disciplined investment processes using extensive risk management capabilities.”
Jeffrey Greenstein, CEO of Quellos has announced his intention to retire concurrent with the closing. He has agreed to serve as an advisor to BlackRock to assist in the transition.
Bryan White, Quellos’ chief investment officer, will serve as global head of the combined fund of funds platform, which will be branded under the name BlackRock Alternative Advisors.
There are no changes expected to the investment strategy or style of existing offerings, each of which will continue to be managed by members of their existing portfolio management teams.
Howard Berkowitz will continue to lead investment strategy for BlackRock’s existing fund of hedge funds and will serve as chairman of the investment strategy forum for the combined absolute return business.
The two private equity teams will continue to manage their products in their respective styles. Specifically, Russ Steenberg will continue to lead BlackRock’s existing private equity fund of funds business, which invests in primary funds, secondary funds and direct co-investment opportunities through core fund of funds, direct co-investment programs and other offerings.
Gene McDonald will continue to lead the Quellos private equity fund of funds team, which manages both private equity and real asset funds of funds with an emphasis on growth-oriented and venture capital managers.
BlackRock was advised by Citi and Skadden Arps. Quellos was advised by UBS and Paul, Weiss.
BlackRock is one of the world's largest publicly traded investment management firms. As of March 31, assets under management were $1.154 trillion. Quellos is among the largest fund of funds manager in the world with over $20 billion of assets managed across a variety of alternative investment products as of first quarter 2007.