Principal Adds To Hedge Fund Stake

By Robert Dixon

InsuranceNewsNet

Principal Financial Group has agreed to purchase a 55 percent stake in hedge fund manager Liongate Capital Management, the company announced on March 4. Terms of the acquisition were not disclosed.

With about $2.1 billion in assets under management for its clients, Liongate specializes in managing portfolios of hedge funds and alternative investments for its clients, which include insurance companies, pension funds and sovereign wealth funds, according to the statement. Liongate’s partners will retain a 45 percent share and will continue to manage the company, according to the statement. The partners are reinvesting a significant share of their proceeds from the transaction into existing Liongate investment strategies, the release said. Headquartered in New York and London, Liongate was founded in 2003.

“The transaction will strengthen The Principal’s alternative investment capabilities, deepen its pool of investment talent, and help extend its product offerings into customized multi-asset and hedge fund solutions,” according to the release.

“The partnership will enhance our capabilities in alternative investments, which is an area where client demand continues to grow,” said Jim McCaughan, chief executive officer of Principal Global Investors, in the statement. “Very few institutional investment firms have this level of expertise in hedge fund investing.”

The deal marks the fourth investment Principal Financial has made in the wealth advisory and management sector in recent years. The company agreed last year to buy AFP Cuprum, Chile’s fourth-largest pension manager, according to a Bloomberg report. Principal acquired a majority stake in London hedge fund Finisterre Capital in 2011 and, in 2005, bought a controlling interest in Columbus Circle Investors of Stamford, Conn.

“Our clients increasingly want hedged solutions over their entire portfolios, and not just on an alternatives side plate,” said Randall Dillard, chief investment officer and co-founder of Liongate. Liongate will benefit from access to The Principal’s global distribution networks.

The transaction is expected to close in the second quarter of 2013, pending regulatory approval.

Principal Global Investors is a subsidiary of The Principal Financial Group.

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