Wilbur Ross, ceo and chairman of WL Ross & Co., predicts AMVESCAP‘s acquisition of his firm will be “a pioneering deal,” foreshadowing a greater number of acquisitions by large money managers seeking out private equity firms. This is partly because smaller private equity funds have to find a way to compete with the recent crop of mega-funds, he said. The acquisition, valued at up to $375 million, gives his firm access to AMVESCAP’s marketing force and AMVESCAP’s global presence, he explained.
AMVESCAP pursued WL Ross in reaction to investors’ appetite for alternative strategies with a global reach, said John Rogers, head of worldwide institutional business at the firm. According to a recent Putnam Lovell report, Storm Front, the first half of this year saw 20 transactions involving alternative asset managers, including ABN AMRO Asset Management‘s purchase of fund of hedge funds International Asset Management, the Bank of New York‘s acquisition of Urdang Capital Management, a real estate firm, and Morgan Stanley‘s purchase of hedge fund Oxhead Capital Management.
WL Ross, which has $3.5 billion in assets, buys and restructures financially distressed companies. Ross intends to roll out additional funds, about which he declined to give details beyond saying that AMVESCAP will become a general partner and receive fee income.
AMVESCAP’s private equity business, INVESCO Private Capital, offers direct venture capital funds, partnership fund of funds and separately managed portfolios. INVESCO’s direct private equity division, which has $800 million under management, will be combined with WL Ross.