NEW YORK, Sept 30 Investment firm TCW has acquired private equity firm Craton Equity Partners in a push to expand its alternative offerings, the head of the firm's alternative products division said Monday.
The firm aims to acquire one more alternative vehicle this year, and continue to acquire four or five alternative vehicles annually for the "foreseeable future," said Jess Ravich, group managing director and head of alternative products at TCW, in an interview.
"Right now, we're drafting for talent," said Ravich. "The world's pretty open in terms of what we're looking to add," he said. Los Angeles-based TCW Group Inc has over $130 billion in assets.
Alternative investments differ from traditional investments such as stocks and bonds and may include hedge funds, private equity, venture capital, and mezzanine debt.
TCW's most recent prior acquisition was in December 2012, when the firm bought Boston-based asset manager Regiment Capital Advisors's Special Situations Funds group. TCW's alternative products group had $8.5 billion in assets as of June 30.
Ravich said that alternative vehicles have become more appealing to institutional investors given low interest rates, as well as the risks of investing in stocks, which became clear during events like the 2008 financial crisis.
Craton invests mainly in companies that focus on sustainability, resource efficiency, and carbon-reducing technology. The firm was founded in 2006 and has $241.5 million in assets.
Ravich said that TCW is poised to benefit from the drop in demand for sustainable businesses in recent years.
"There's less money looking at better and more seasoned deals," he said. "We think we can return outsized returns to our investors because of that dynamic," he added.
Craton Equity co-founders and managing partners Bob MacDonald and Tom Soto will become managing directors within TCW's alternatives group. Ravich said no investment banks have been involved in TCW's alternative products group's acquisitions.
Private-equity group Carlyle completed its acquisition of TCW in February. The firm was formerly owned by French bank Societe Generale.