LONDON (Reuters) - U.S. asset manager Principal Global Investors said on Monday it is to buy a majority stake in hedge fund investor Liongate Capital Management, the latest deal to emerge in the struggling industry.
Principal has agreed to acquire 55 percent of London- and New York-based Liongate, which was founded in 2003 and manages around $2.1 billion in assets, the firm said in a statement.
Liongate’s management will hold on to the remaining 45 percent while reinvesting a significant share of the deal’s proceeds into Liongate’s existing investment funds. The value of the purchase was not disclosed.
The deal is the latest in the $627 billion fund of hedge fund industry.
These investors, which try to pick the best managers and reduce risk by holding a basket of funds, have been hurt by criticism about their high fees and poor returns.
In December Legg Mason announced it was buying Fauchier Partners, one of London’s oldest fund-of-hedge-funds firms, from BNP Paribas Investment Partners (BNPP.PA).
Other deals last year included Franklin Resources (BEN.N) buying a majority stake in K2 Advisors, private equity group Kohlberg Kravis Robert’s (KKR.N) buyout of Prisma Capital Partners, and Man Group’s (EMG.L) purchase of FRM.
Principal Global, the investment arm of insurer Principal Financial Group (PFG.N), manages $281.5 billion in assets. The Liongate stake is not its first move into hedge funds.
In 2011 it bought 51 percent of Finisterre Capital, a London-based emerging markets manager.
Reporting by Tommy Wilkes; Editing by David Cowell