Aberdeen’s alternatives arm eyes fresh deals, buys two firms

  • Aberdeen closes acquisition of Flag Capital
  • Also buying hedge fund firm Arden
  • May consider more acquisitions

Andrew McCaffery, global head of alternatives, said the asset manager may consider purchasing other firms, possibly in the real assets or infrastructure investment business. His comments came after a media presentation at its New York office on September 9.

Still, the firm has more work to leverage its acquisition of Flag Capital, a lower-middle-market venture capital and private equity fund manager in the United States and Asia, which closed on August 31, he said. “We’ll take their expertise and deploy it across our platform,” McCaffery said.

Flag Capital, which has an office in Hong Kong, had been targeting $225 million for Flag Private Equity VI, prior to its acquisition. McCaffery didn’t offer any updates on the status of the fund. But he said Aberdeen plans to work with Flag Capital on other funds, products or investments in venture capital and natural resources down the road.

Aberdeen also has agreed to buy Arden Asset Management LLC, a specialist hedge fund manager and adviser with offices in New York and London, with plans to close the deal by the end of the year.

McCaffery said Aberdeen remains interested in hedge funds despite the rocky performance of some hedge funds in recent years and despite moves by big LPs such as the California Public Employees’ Retirement System to pare back allocations to hedge funds.

Liquid alternatives through hedge funds remain a key segment for LPs, he said. “As LPs become more sophisticated, it’s driving demand for liquid alternatives,” he said. “There will always be challenges. Our role is to ensure we avoid them.”

Aberdeen has been on the acquisition trail to grow its alternatives business through multi-manager hedge funds, property and private market allocations, direct infrastructure investments and pan-alternative capabilities.

Aberdeen cited a recent PWC report that forecasts total investment in alternative assets will nearly double to $15.3 trillion by 2020.

Following the completion of the Arden transaction, Aberdeen’s alternatives division under McCaffery will have $30 billion of assets under management.

Action Item: See PWC’s report on alternative assets: http://download.pwc.com/ie/pubs/2015-alternative-asset-management-2020.pdf