Aberdeen Asset Management, a $483 billion U.K.-based investment firm, agreed to buy Arden Asset Management to expand its hedge-fund business.
Terms weren't disclosed in a statement Tuesday announcing the deal.
Arden, founded in 1993 by Averell Mortimer, oversees $11.5 billion, including more than $1 billion in two open-end mutual funds that invest with hedge-fund managers. Mr. Mortimer and his team of about 50 people will join Aberdeen and report to Andrew McCaffery, global head of alternatives.
“The deal significantly strengthens our
hedge fund solutions capability and expands our global client base,” Martin Gilbert, Aberdeen's chief executive officer, said in the statement.
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The purchase of New York-based Arden comes as the hedge fund-of-funds business has lagged behind the industry's growth. In 2007, fund of funds accounted for 43% of industry assets, according to Hedge Fund Research Inc. Today, they make up 23% of the almost $3 trillion invested in hedge funds, and they haven't seen annual net deposits since 2007.
To combat the trend, many firms began selling mutual funds that invest in hedge funds or follow similar strategies to appeal to retail customers and companies that want to add alternatives to their 401(k) retirement plans. Arden started its first such liquid alternatives fund in 2012.
ROBECO DEAL
The firm in 2011 agreed to take over Robeco Group's $1.3 billion fund-of-funds business, and acquired $1.1 billion in hedge-fund investments from JPMorgan Chase & Co. in 2009.
Aberdeen currently manages about $1.3 billion in funds that invest in hedge funds. The firm has been broadening its alternative investment offerings, which include
private equity, real estate and infrastructure investing.
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Those businesses generally charge higher fees than traditional money management. Arden's funds collect as much as 2% in management fees and up to 15% in performance fees, according to a U.S. regulatory filing.
The transaction, subject to approval from the U.K. Financial Conduct Authority and the Irish Central Bank, may be completed during the fourth quarter, Aberdeen said in the statement.
