BOSTON (Reuters) - Affiliated Managers Group Inc (AMG.N), a holding company for money management firms, said on Monday it will buy stakes in five hedge funds from Goldman Sachs Group Inc (GS.N) for $800 million, sparking a 3.5 percent jump in Affiliated Managers stock.
AMG, which has been buying pieces of hedge funds for more than a dozen years, said the deal will boost its assets under management by roughly $55 billion to $700 billion and increase economic earnings per share by 50 cents to 80 cents in 2017.
Goldman is selling minority stakes that its Petershill Fund I owns in hedge funds Winton Capital Group Ltd, Capula Investment Management LLP, Partner Fund Management LP, Mount Lucas Management LP, and CapeView Capital LLP.
Senior management at each of the funds will continue to own the bulk of the equity and operate independently under the same terms as the prior arrangements with Petershill Fund I, AMG said.
AMG’s share price, which has fallen 21 percent over the last 12 months, got a shot in the arm after the announcement, trading at $177.45, up $5.93.
Hedge funds have suffered through their worst period since the financial crisis, with many posting lackluster returns and investors complaining loudly about hefty fees.
During the first three months of 2016, investors pulled out $17 billion in assets from hedge funds, which manage roughly $2.8 trillion.
In a letter to investors obtained by Reuters, Petershill said it “maintains its conviction” in investing in the alternatives industry, including hedge funds.
The fund will receive up to $835 million from the deal, the letter said.
Petershill’s second fund is raising funds to buy stakes in private equity firms as it tries to diversify its investment pool, according to reports in May.
Petershill is part of the alternative investment management group within Goldman’s investment management division, led by Tim O’Neill and Eric Lane. Investment management has grown its share of revenue within Goldman to 21 percent in the first quarter of 2016, up from 15 percent in the year-ago period.
Reporting by Svea Herbst-Bayliss in Boston and Olivia Oran in New York; Editing by Jeffrey Benkoe and Cynthia Osterman