Russell investment group has expanded its private equity capacity with the acquisition of global private equity fund-of-funds specialist Pantheon to create an $8bn business. Pantheon will retain its brand name and management will remain unchanged led by chairman Rhoddy Swire and senior partners Carol Kennedy and David Braman. Hal Strong, managing director of alternative investments at Russell, will oversee the business and Helen Steers, head of Russell’s European private equity business, will become a partner of the enlarged group.
Russell was a relatively late entrant to the private equity market and so the acquisition of Pantheon may be a faster and cheaper alternative for the group to expand its private equity business, rather than battling it out in a seemingly over-crowded market place to grab market share.
Pantheon, which currently manages $7bn of private equity fund-of-funds assets, will become Russell’s solution for private equity services providing an enhanced and specialised capability within Russell’s broader range of investment services. Pantheon will remain exclusively focused on private equity services and clients and will continue to serve clients from the firm’s offices in London, Brussels, San Francisco and Hong Kong.
Russell, which has its own private equity fund-of-funds business, will integrate services with Pantheon to deepen its private equity capabilities as part of a complete range of multi-manager investment solutions.
Hal Strong said: “We are thrilled to have found such an ideal strategic fit between Russell and Pantheon. This agreement represents our increased commitment to private equity?Our goal is for Pantheon to continue to offer excellent private equity investment services to its clients and this acquisition will allow Russell’s private equity business to be organised and managed under Pantheon’s leadership.”
The transaction demonstrates the growing global appetite for private equity fund-of-funds. There are around 120 fund-of-funds operating in Europe and the US, managing some $130bn of assets and the industry is growing. While many have predicted a consolidation of the fund-of-funds marketplace, there are still fund-of-funds groups emerging such as Keyhaven Capital, €150m vehicle launched by former AXA Private Equity manager Sasha van de Water earlier this year to invest in European primary funds.