(Reuters) -Asset management firm T Rowe Price on Thursday agreed to buy fund manager Oak Hill Advisors in a $4.2 billion deal as it looks to expand its footprint in the alternative investments market.
The cash-and-stock deal could trigger more M&A activity in the asset management space, which has already seen a flurry of deal activity this year, with potential tie-ups between other mutual fund managers and private equity firms.
To cater to growing investor demand, asset management companies have seen a wave of consolidation in 2021, and the trend is expected to continue for the rest of the year, according to a report https://www.pwc.com/us/en/industries/asset-wealth-management/library/deals-insights.html from accounting and consulting firm PwC.
Some of the high-profile transactions from the sector announced this year include Wells Fargo & Co’s $2.1 billion deal to sell its asset management business to private equity firms GTCR LLC and Reverence Capital Partners, and Ares Management Corp’s $1.1 billion acquisition of Landmark Partners.
As of July end, New York-based OHA manages $53 billion of capital across its asset classes. Since January last year, it has raised $19.4 billion of capital.
T Rowe, which offers a suite of mutual funds, account management and other advisory services, manages $1.61 trillion in assets as of Sept. 30.
The Oak Hill deal will be financed through 74% of cash and the rest in T Rowe’s common stock. The company will pay an additional $900 million if certain business milestones are achieved in the beginning of 2025, it said.
Evercore was the financial adviser to T Rowe Price, while J.P. Morgan Securities and M. Klein & Company advised OHA.
(Reporting by Niket Nishant in Bengaluru; Editing by Shailesh Kuber)
