T Rowe Price to expand into alternative investments with $ 4.2 billion deal with Oak Hill
October 28 (Reuters) – Asset management firm T Rowe Price (TROW.O) on Thursday agreed to buy fund manager Oak Hill Advisors in a 4.2 cash and stock trade billion dollars, going deeper into the alternative investment market and offering more choices for its clients.
T Rowe shares rose 6% to $ 216, their highest level in more than a month.
The deal comes at a time when asset managers are exploring ways to boost profitability amid fierce competition and falling fees due to investors shifting to more passive investments.
Some asset managers seek greater scale in existing areas and others are diversifying into new spaces such as alternatives, which generate higher returns.
This trend could trigger more potential matches between other mutual fund managers and private equity firms. Overall, the steady stream of consolidation in asset management is expected to continue, according to a report by accounting and consulting firm PwC.
“The OHA is reaching the high bar we have set for inorganic opportunities, and its proven expertise in private lending will help us meet our clients’ demand for alternative lending,” said T CEO. Rowe, Bill Stromberg.
At the end of July, New York-based OHA managed $ 53 billion in capital across all of its asset classes. Since January of last year, it has raised $ 19.4 billion in capital.
T Rowe, which offers a range of mutual funds, account management and other advisory services, has $ 1.61 trillion in assets under management as of September 30.
The total value of the transaction includes $ 3.3 billion payable at closing, through 74% of cash and the remainder in common stock of T Rowe, and an additional $ 900 million if certain business milestones are reached in early 2025. , the company said.
Evercore was T Rowe Price’s financial advisor, while JP Morgan Securities and Mr. Klein & Company advised OHA.
Reporting by Niket Nishant in Bengaluru and David French in New York; Editing by Shailesh Kuber
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