As part of its effort to expand into alternative investment markets, T. Rowe Price has announced that it will acquire alternative credit manager Oak Hill Advisors for $4.2 billion.
The deal is expected to close at the end of this year, according to T. Rowe Price’s statement this morning. The investment management firm will pay $3.3 billion at closing with both cash and stock and pay the remaining $900 million upon certain business achievements starting in 2025.
The deal signals that merger and acquisition activity in the asset management industry is heating up, with managers looking for opportunities to expand their business scope through inorganic growth.
“While we are committed to our long-term strategy to grow our business organically, we have also taken a deliberate and thoughtful approach to considering adding new capabilities through acquisitions that advance our business strategy,” said Bill Stromberg, chair of T. Rowe Price’s board of directors and chief executive officer. “OHA meets the high bar we have set for inorganic opportunities, and their proven private credit expertise will help us meet our clients’ demand for alternative credit.
Founded in Baltimore in 1937, T. Rowe Price has accumulated $1.61 trillion in assets under management as of the end of September, with $975 billion in equity, $457 billion in multi-asset, and $181 billion in fixed-income strategies, according to the conference call. The company’s investments span the US, Europe, Asia-Pacific, and other emerging markets.
OHA has $53 billion assets under management across the credit market as of the end of July, including $20 billion in private markets, $18 million in liquid strategies, and $15 billion in structured credit. More than half of its assets are from pension plans, with the rest raised from family offices, sovereign wealth funds, and other institutional investors.
OHA will serve as a private markets platform for T. Rowe Price as the latter looks to complete its “existing global platform and ongoing strategic investments in its core investments and distribution capabilities,” according to T. Rowe Price’s statement.
OHA founder and CEO Glenn August will continue to lead the company, and he is expected to join T. Rowe Price’s board of directors and management committee.
“Joining with T. Rowe Price will better position us to meet the evolving investment needs of clients, as well as the financing needs of companies and financial sponsors, while maintaining our record of measured and thoughtful growth,” August said.