Asset management firm FIS Group has inked a deal to acquire North Carolina-based Piedmont Investment Advisors in an effort to scale both businesses.
The combined company will manage more than $10 billion in assets when the deal closes during the third quarter of 2018, according to an announcement Wednesday. This is the first acquisition for FIS, which is based in Philadelphia and specializes in global small-cap strategies.
“For both of us, we thought that, given trends in the industry, a strategic acquisition would make sense,” Tina Byles Williams, chief executive and chief investment officer at FIS, said by phone.
Asset managers like FIS and Piedmont Investment Advisors have been turning to consolidation as a solution to revenue pressures arising from declining fees and increasing competition for institutional mandates. Another recent example is funds-of-funds firm Lighthouse Investment Partners’ March purchase of rival Mesirow Advanced Strategies, a deal expected to close this summer.
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Official deal talks surrounding the FIS-Piedmont merger began in 2017, according to Williams, though the two groups had been casually discussing a deal prior to that. The firms have little overlap in product offerings: FIS invests in global small-cap strategies in capacity strained areas, while Piedmont offers active, passive, and structured-beta equity strategies, as well as core fixed income management.
“We’re in an industry in which scale has become increasingly important,” Williams said. “We thought we could put together a deeper bench of investment managers.”
The combination of FIS, which manages $5.6 billion in assets as of April 30, 2018, and Piedmont, which has $4.7 billion under management, will give the resulting firm more than $10 billion in assets.
Following the merger, Piedmont will operate as a fully-owned subsidiary of FIS. Williams will be the chief executive officer of the combined companies, and will continue to work as FIS’ chief investment officer. Isaac Green will remain as president and chief investment officer of Piedmont, which will continue to operate in Durham, North Carolina.
“This is about putting together multi-strategy solutions under one combined firm, in a way that would be accretive to our clients and our firm, in terms of its ability to thrive in current market trends,” Williams said.