Private investment firm Northill Capital plans to buy a majority stake in Strategic Investment Group, an outsourced CIO (OCIO) business with more than $28bn in discretionary assets under management,
Financial terms were not disclosed but the deal will see Northill buy its share from San Francisco private equity firm FFL Partners, according to an announcement released on 20 December.
Strategic is the largest independent OCIO in the US, it claims.
The 31-year-old Arlington, Virginia-based firm has 96 employees. As a result of the deal, senior management will increase its direct ownership of the business to more than 25% over the coming years.
Strategic CEO Brian Murdock said the firm’s use of private capital to back its leadership team has helped it maintain operating independence.
“This new partnership with Northill gives us access to permanent and patient capital and deep industry expertise that will support and perpetuate our success as an independent firm, while providing an internal mechanism for the firm’s management to increase its ownership of the firm in the years ahead,” he said in a statement.
Strategic works with clients to manage their entire portfolios or to focus on specific asset classes such as hedge funds, real estate or private equity. It acts as an extension of its clients’ investment teams, providing customised fiduciary services.
The use of OCIO firms by institutional investors has grown in popularity over the past decade despite concerns about conflicts, including larger firms directing client assets into in-house products.
The Strategic stake purchase marks Northill’s sixth, and increases its AUM to more than $84bn.
Among its previous stakes are Securis Investment Partners, Capital Four and Longview Partners. The firm was founded in 2010 by ex-BNY Mellon Asset Management vice chairman Jon Little.
Little called Strategic “the gold standard” independent firm in the OCIO sector.
“Northill’s investment in Strategic is consistent with our strategy to invest over the long-term in high-quality active investment businesses that create a strong strategic and cultural fit with Northill,” Little said in a statement.
“As an owner alongside management, our focus is on being a long-term supportive partner and we will work jointly with Strategic to ensure the business continues to grow and develop in a sustainable way whilst maintaining its independence, client-focused culture and strong investment performance.”
Strategic’s team will continue to work out of its Virginia office. Morgan Stanley acted as financial advisor to Strategic for the deal.
Northill to acquire majority stake in Strategic Investment Group on HFM InvestHedge.