BlackRock to Acquire Fund of Funds Manager

BlackRock, Inc. has entered into an agreement under which it will acquire the fund of funds business of Quellos Group, LLC for up to $1.7 billion.
The combined fund of funds platform will be named BlackRock Alternative Advisors. The combined business will comprise a fund of funds platform with over $25.4 billion in assets under management. Products will include hedge, private equity, and real asset fund of funds, as well as specialty and hybrid offerings, for institutional and individual investors worldwide, according to a BlackRock news release.
“Following closing, we will combine our hedge and private equity fund of funds activities on a unified platform,” said Laurence D. Fink, BlackRock Chairman and CEO, in the release. “In the face of challenging market and business conditions, our clients around the globe are pursuing a wider array of investments and strategies, including absolute return products, portable alpha and liability-driven investing. Fund of funds are being more widely used in these strategies and the combined expertise of BlackRock and Quellos will enhance our ability to deliver innovative solutions to our clients worldwide.’
Jeffrey Greenstein, CEO of Quellos has announced his intention to retire, but has agreed to serve as an advisor to BlackRock to assist in the transition. Bryan White, Quellos’ Chief Investment Officer, will serve as global head of BlackRock Alternative Advisors.
The fund of hedge funds businesses of both firms will be integrated, the release said. Howard Berkowitz will continue to lead investment strategy for BlackRock’s existing funds of hedge funds and will serve as Chairman of the Investment Strategy Forum for the combined absolute return business.
Russ Steenberg will continue to lead BlackRock’s existing private equity fund of funds business, and Gene McDonald will continue to lead the Quellos private equity fund of funds team.
Under the terms of the deal, which has been approved by the Board of Directors of BlackRock, Quellos Group will receive at closing $562 million in cash and $188 million in BlackRock common stock. In addition, Quellos may receive up to an additional $970 million in cash and stock over three and a half years contingent on certain measures.