Cantor Fitzgerald to acquire hedge fund unit from UBS

Cantor Fitzgerald LP agreed to buy UBS Group AG’s O’Connor unit, ending more than three decades of ownership by the Swiss bank and placing the hedge fund back in control of one of its early founders.

The deal includes O’Connor’s six investment strategies with about $11 billion in assets under management, according to a statement Wednesday. Additional terms of the agreement weren’t disclosed, but Bloomberg News has previously reported that the talks included a revenue-sharing proposal.

The sale will bring the hedge fund, private credit and commodities businesses under the leadership of Bill Ferri, Cantor’s asset-management chief and a founding member of O’Connor. UBS’s predecessor, Swiss Bank Corp., began acquiring the Chicago-based derivatives house O’Connor & Associates in 1992.

When the transaction is completed, O’Connor’s investment and support teams will move to Cantor Fitzgerald’s asset-management division. UBS and Cantor also plan to establish a long-term commercial arrangement, with O’Connor’s capabilities continuing to be offered to UBS wealth-management clients, according to a Cantor Fitzgerald statement.

The acquisition is part of a flurry of activity for Cantor Fitzgerald, now majority owned by the children of Commerce Secretary Howard Lutnick after he divested his business interests. The core of the firm is now led by Lutnick’s three former deputies and two oldest sons, who have already launched a lending project and a cryptocurrency firm this year.

In Cantor’s statement, Kyle Lutnick, the firm’s executive vice chairman and oldest son of Howard Lutnick, called the acquisition “a high-conviction investment in our future.”

UBS, for its part, has sought ways to cut riskier businesses as it faces extra capital requirements due to tougher regulation in Switzerland. 

The transaction is expected to be completed during the fourth quarter and is subject to regulatory approvals, the firms said. 

While hedge fund deals are rare, they are getting more frequent.

Last month, Affiliated Managers Group Inc. said it was acquiring a minority stake in multistrategy investment firm Verition Fund Management, snapping up a piece of one of the fastest-growing hedge funds in the $4.5 trillion industry.