Virtus Investment Partners has acquired Stone Harbor Investment Partners, a fixed-income manager with $15.4 billion in assets under management, as an affiliate manager.
Virtus will acquire all of Stone Harbor, but the latter will “maintain autonomy over its investment processes, brand, and culture” as a “boutique” affiliate, according to a statement. The announcement did not disclose the terms of the acquisition, but the deal is predicted to close by the end of the year, depending on approval from the Stone Harbor Funds board and shareholders.
The Stone Harbor deal is one of three ongoing acquisitions for Virtus in 2021. Currently, the firm has nine official investment partners, including Kayne Anderson Rudnick, Sustainable Growth Advisors and Newfleet Asset Management.
The firm’s model allows affiliates to “retain their investment philosophy, culture, and brand,” said Rick Smirl, executive vice president and chief operating officer of Virtus, in a phone call with Institutional Investor. According to Smirl, Virtus, in turn, meets their affiliate companies’ “infrastructure needs, including operations, IT and [distribution capabilities].”
“The boutique affiliate model is unique and really allows the affiliates to continue to generate alpha for their clients,” Smirl said.
Smirl said the new acquisition will benefit Virtus because Stone Harbor is a “respected fixed-income manager,” and “an organization that’s held in high regard, by, in particular, institutional clients with a global following, which I think is important.”
For Stone Harbor, Virtus meets the firm’s demand for improved digital infrastructure. According to Jim Craige, co-chief investment officer and head of emerging markets debt at Stone Harbor, the company’s technological platform is “second to none.”
“Also, our ESG platform: They’re going to be helping us further develop that.” said Craige in a phone call with II. He highlighted the “key” benefit of the deal: “There’s absolutely no change with us at Stone Harbor. We retain complete autonomy.”
In the future, Smirl said Virtus’ “strong value proposition” will attract more affiliates and asset managers in the marketplace. “We think our model has the potential and scale to continue to take on additional affiliates over time.”