Asset Manager Breaks Into PE With Pantheon Purchase

Boston-based asset management company Affiliated Managers Group has acquired global funds-of-funds manager Pantheon Ventures from pension fund adviser Russell Investments, a subsidiary of Northwestern Mutual Life, for approximately $775 million. Additional earn-outs are possible over the next five years.

Following the closing, Pantheon Ventures’s management team would hold a significant stake in the business. The day-to-day running of the business will remain unchanged and the firm will continue to raise independent third-party funds from institutional investors as it has done in the past. At press time it wasn’t clear whether Pantheon Ventures might benefit from getting additional distribution from AMG, which manages about $253 billion on behalf of institutional investors, wealthy investors and retail investors across an array of asset classes.

A 25-year-old veteran, Pantheon Ventures is a well-respected funds-of-funds player and currently has around $22 billion in assets under management, including a particularly high level of dry powder. Uncommitted funds remain undisclosed, but according to a Pantheon Ventures spokesperson the team is “constantly in fundraising mode” for one of its vehicles in the primary or secondary market.

The Pantheon Ventures team includes 63 investment professionals (and a total staff of 141) working in offices in London, San Francisco, New York and Hong Kong. Under terms of the agreement, 21 management partners will enter into long-term employment agreements with the firm. Managing partner Alastair Bruce leads the Pantheon Ventures team, with Helen Steers as head of the European primary investment team and Susan Long McAndrews as head of the U.S. primary investment team.

Pantheon Ventures manages regional funds of funds earmarked for investments in Europe, the United States and Asia, as well as global secondary funds of funds, global infrastructure funds of funds and customized separate-account programs for more than 300 global clients, including pension funds, endowments, government bodies and insurance companies. In terms of investment breakdown, about 80 percent of Pantheon Ventures’s assets are allocated to the primary market and 20 percent to the secondary market. By geography, around 50 percent of fund commitments are directed to the United States, with 40 percent allocated to Europe and 10 percent to Asia.

In the United States, about 55 percent of committed capital from Pantheon Ventures is allocated to buyout funds, 33 percent to venture and 12 percent to special situations. In Europe, buyouts account for the lion’s share of investment with 85 percent, venture takes just under 10 percent (an allocation which has remained consistent throughout Pantheon’s existence) and special situations take around 5 percent. In Asia, buyout funds account for 64 percent of commitments, venture for 32 percent (which also includes late stage, growth and expansion funds) and special situations take 4 percent.

Pantheon Ventures does not disclose its fund investments but its London Stock Exchange-listed affiliate Pantheon International Participations reveals fund commitments to such European firms as Apax Partners, BC Partners, and CVC Capital Partners, and such U.S. firms as ABRY Partners, Avista Capital Partners, Brentwood Associates, Carlyle Group, Churchill Equity, Providence Equity Partners and Oak Investment Partners.

Russell Investments acquired Pantheon Ventures in 2004, and the sale allows the firm to focus on its core business such as its traditional and alternative funds, its index funds and its global consulting business. The firm will continue to be responsible for unfunded commitments to vehicles that have already closed. Any commitments to vehicles still being raised will be assumed by AMG and remain with Pantheon.