TCW [profile] is boosting its alts operations with the purchase of a socially responsible private equity firm based in Los Angeles.

TCW, which was bought out by Carlyle in August, reported that it has acquired Craton Equity Partners.

The terms of the transactions were not disclosed.

TCE had made a three-pronged push into alts in December 2012 with a partnership with Scoggin Capital Management, the acquisition of Special Situations Fund, and the hiring of Jess Ravich, the group managing director and head of alternative products.

Why the acquisition now? These two excerpts from a December 6 Moody's report on its Ba1 rating to Clipper Acquisitions, the vehicle developed by Carlyle to fund its acquisition of TCW:

  We view TCW's concentration in fixed income to be a risk due to the company's higher sensitivity to changes in demand for fixed-income assets relative to peers with more balanced assets under management. Further, the company has gone through significant change in a relatively short period of time including the departure of several key investment professionals, the acquisition and integration of fixed income investment manager Metropolitan West and a prolonged period of uncertainty around the future ownership of the firm. While TCW's franchise showed resilience through this period, we see risks in the company's ability to execute on its strategy to rebalance the company's AUM through the growth of its equity and alternatives businesses.

  The company's ratings and/or outlook could see upward pressure based on further evidence of franchise stability supported by sustained progress towards the strategic objective of increased AUM diversification. The ratings could face downward pressure if we see a sharp decline in fixed-income valuations coupled with a reversal in investor demand for fixed income products given the company's relatively large AUM concentration in fixed-income.

Here is the press release:

---

Company Press Release

TCW Acquires Private Equity Firm, Craton Equity Partners

Acquisition Bolsters TCW’s Growing Alternative Asset Management Platform

LOS ANGELES--The TCW Group, a global asset management firm, announced today that it has acquired Los Angeles-based Craton Equity Partners, a private equity firm that specializes in socially responsible investing. Terms of the transaction were not disclosed.

Founded in 2006, emerging manager Craton Equity provides growth capital to venture-backed companies within the sustainability, resource efficiency and carbon-reducing technology sectors. The firm has $241.5 million in assets under management and typically invests in companies with low-capital requirement business models that generally operate independent of any tax credits and government subsidies.

“The acquisition of Craton Equity further expands our alternative asset management platform at a time when institutional investors are increasingly issuing mandates for socially responsible investing,” said Jess M. Ravich, group managing director and head of alternative products at TCW. “TCW has always been a diversified asset manager, and alternative products continue to be an important part of the firm’s investment mix. We are very pleased to welcome Craton Equity to our platform and look forward to offering this socially-responsible investment strategy to our institutional clients.”

Craton Equity managing partners Bob MacDonald and Tom Soto will become managing directors at TCW/Craton. Craton Equity managing partner Kevin Wall will become a senior advisor, while David Asarnow, partner at Craton Equity, will become a senior vice president and director of investments at TCW/Craton. All of the former Craton Equity partners will be on the investment committee for TCW/Craton, where they will be joined by Ravich and David Wang, director of alternatives at TCW. All employees of TCW/Craton will be relocated to TCW’s Los Angeles office.

“The Craton Equity team is very pleased to now be a part of TCW’s alternative investments platform,” said Soto. “Becoming part of a large asset manager that is unequaled in its success gives us additional resources and puts us in an ideal position to help our limited partners participate in socially responsible investing. We look forward to this next chapter as we continue to focus on our investment mandate – obtaining superior returns for our partners while also creating long-term environmental and social benefits.”

“Many aspects of the economy are being touched by climate change and now require investments in finding sustainable solutions,” said Wall. “We see unprecedented amounts of capital flowing into environmentally conscious companies, and TCW/Craton will endeavor to contribute to these solutions, while generating solid returns.”

About The TCW Group

Founded in 1971, The TCW Group, Inc. develops and manages a broad range of innovative, value-added investment products that strive to enhance and protect clients’ wealth, with over $130 billion in assets under management. TCW clients include many of the largest corporate and public pension plans, financial institutions, endowments and foundations in the U.S., as well as a substantial number of foreign investors and high net worth individuals. For more information, please refer to www.tcw.com.

 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE