Alger to add Redwood to $22B fund management business

New York-based firm is betting on global equities rather than bonds, alts.

Alger Group Holdings, the $22 billion fund manager run by Dan Chung, agreed to acquire Redwood Investments as the growth equity investor seeks to expand further.

The takeover of Redwood, a two-decade-old asset manager based in Newton, Massachusetts, will combine two women-owned companies and add roughly $1.6 billion of assets under management to Chung’s firm. The deal is expected to be completed at the end of the month, according to a statement. Terms weren’t disclosed.

New York-based Alger is making a bigger bet on investing in equities worldwide, particularly in growth and innovation. Chung sees his view as contrarian, with many investors seeking returns in rebounding bond markets and a booming alternatives market. Equity markets have outperformed fixed income over the past decade, the Alger chief executive officer said, and he believes the coming years will be as promising.

“There is a sweet spot within active, fundamental equity management that can do quite well in the next decade,” Chung said. “We are building at Alger, I think, the greatest center of growth investors that you’ll see in the U.S.”

Redwood will be a wholly owned unit of Alger and led by co-founders and co-chief investment officers Jennifer Silver and Michael Mufson. Redwood will become a sub-adviser to Alger’s global growth, international and emerging-markets funds.

“Our goal is basically to double over the next five years,” Chung said, adding that Alger is seeking additional acquisitions. “We are actively looking and continue to seek opportunities. We get inbound interest far in excess of what we’re going to do, but there are significant opportunities.”

Closely held Alger is owned by employees and members of founder Fred Alger’s family.