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AGF Management Ltd. AGF-BT is expanding its alternative assets business by acquiring a 51% stake in private equity fund manager Kensington Capital Partners for $45 million.
Toronto-based AGF on Monday doubled the size of its private capital division by acquiring a controlling stake in Kensington, an employee-owned company with $2.6 billion of capital that invests in venture capital and small businesses. announced that it would. AGF oversees his $41.8 billion in client assets, primarily in mutual funds.
Founded in 1957, AGF began offering clients alternative assets such as infrastructure funds a decade ago. Two years ago, the firm hired Brookfield Asset Management’s BAM-T veteran Ash Lawrence to lead its private capital team, with a mission to expand by acquiring fund managers. Adopted.
“By partnering with Kensington, AGF achieves two goals,” Lawrence said in an interview. “This will diversify AGF and create a second pillar alongside our traditional asset management business, providing access to proven private equity managers within our existing distribution channels.”
Kensington chairman and founder Tom Kennedy has announced that his firm will sell a controlling stake to AGF to expand its asset management distribution network and raise capital for a new private equity fund. He said he had decided.
“AGF brings strong customer relationships across North America and gives us distribution that we lack outside of Canada,” he said. A former investment banker, Mr. Kennedy’s relationship with AGF goes back 40 years. “We have always admired his approach to investing at AGF.”
AGF will continue to build out its alternative asset platform, focusing on sectors such as private credit and liquidity alternative funds that allow retail investors access to hedge fund strategies previously available only to institutional investors. It’s a plan.
In 2014, AGF partnered with Calgary-based fund manager SAF Group to distribute SAF Group’s private credit products. SAF Group oversees approximately $4 billion.
Kensington’s flagship product is a $1.7 billion private equity fund. Over the past 10 years, the fund had an annual return of 12.3%, compared to the return of its benchmark, his S&P/TSX index, of 7.6%. Kensington funds are open-ended, meaning investors can withdraw their funds at any time. Most private equity funds only allow redemptions after seven years or more.
Kensington will retain its name and employees will continue to own the remaining 49 percent of the company. Three AGF executives will join the company’s board of directors: Mr. Lawrence, President Judy Goldring, and Chief Financial Officer Ken Tsang.
Founded in 1996, Kensington has offices in Toronto, Vancouver, and Calgary. All three senior executives will continue in their roles: Kennedy, chief investment officer Eamon McConnell and venture capital head Rich Nathan.
Kensington also manages the BC Tech Fund, a $101 million venture capital fund launched by the British Columbia government in 2016.
The wealth management industry has been consolidating around the largest players over the past two decades, in part due to rising distribution and compliance costs. Deloitte said in a recent report that traditional asset managers such as AFG are increasingly targeting alternative asset managers.
“Strong investor demand and high return expectations make alternatives attractive in an environment of low management fees, low interest rates, and increased competition,” said Kendra Thompson and Lisa Weatherbed, partners at the consulting firm. “It’s happening,” he said.
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