A publicly traded, mutual fund industry titan in Baltimore, a firm that traditionally focused on organic growth and rarely does acquisitions, is poised to buy
a fixed income-focused alternative asset manager in New York City.
| William J. "Bill" Stromberg|
T. Rowe Price
Today, Bill Stromberg
(chair and CEO of T. Rowe Price Group, Inc.
[profile]), Rob Sharps (president, head of investments, and group chief investment officer at T. Rowe), and Glenn August (founder and CEO of Oak Hill Advisors, L.P.
that T. Rowe has agreed
OHA. T. Rowe will pay $3.3 billion up front (74 percent of that in cash, and the rest in T. Rowe stock) for OHA, and they'll pay up to $900 million more in cash in an earnout, starting in 2025.
The deal is expected to close by the end of 2021. Evercore
advised T. Rowe on the deal, while J.P. Morgan Securities LLC
and M. Klein & Company
advised OHA. On the legal counsel side, Dechert LLP
supported T. Rowe, while Paul, Weiss, Rifkind, Wharton & Garrison LLP
OHA had $53 billion in "capital under management" as of July 31, so the $3.3-billion upfront purchase price translates into 6.23 percent of that capital. If T. Rowe pays the full earnout, the $4.2-billion total price tag translates into 7.92 percent of OHA's capital. (T. Rowe, by comparison, had $1.61 trillion in AUM as of September 30.) OHA has more than 300 employees.
The plan is for August to join T. Rowe's board and its management committee, and OHA's whole partner management team (including August) have signed long-term deals with T. Rowe. Watch for OHA to operate as a standalone business within T. Rowe, keeping its own team and investment style.
"OHA meets the high bar we have set for inorganic opportunities, and their proven private credit expertise will help us meet our clients' demand for alternative credit," Stromberg states.
"We share a vision with OHA's seasoned management team to build a broader business in private markets by combining their specialty in alternative credit with our global scale," Sharps states.
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