Russell Investments has signaled a tilt to private markets assets following a just-announced deal that has seen US-listed specialist firm, Hamilton Lane, take a US$90 million minority equity stake in the Seattle-headquartered multi-manager.
In a statement, Russell said the arrangement would offer the group’s “global clients with access to Hamilton Lane’s industry-leading private markets investment solutions, data-driven research, and innovative technology tools”.
As at the end of last year, Hamilton Lane reported about US$76 billion in discretionary assets under management and US$581 billion of advised money. Russell manages more than US$320 billion globally in its fund-of-fund strategies while consulting on roughly US$2.5 trillion of assets.
Michelle Seitz, Russell Investments chief, said in the statement: “Given increasing market complexities and rising needs around financial security, fiduciaries are looking for partners that can seamlessly provide tailored, differentiated investment solutions.
“This partnership demonstrates our 85-year fiduciary commitment to provide comprehensive, leading-edge investment solutions and risk management to our clients.”
Founded almost 30 years ago, the Philadelphia-based Hamilton Lane builds “flexible investment programs that provide clients access to the full spectrum of private markets strategies, sectors and geographies”, according to the press release boilerplate.
The manager closed-off its biggest fund-raising ever this February, pulling in almost US$4 billion for the Hamilton Lane Secondary Fund V.
Listed on the Nasdaq, Hamilton has offices in 17 cities including Sydney. While the Russell deal did not rate a stand-alone release to the Nasdaq, Mario Giannini, Hamilton Lane chief, said in the joint statement the new partnership reflected a commitment to “providing private markets access to a broader group of investors around the world”.
“We believe our investment capabilities and expertise, together with Russell Investments’ strong outsourced investment solutions, will enable enhanced and integrated access to the global private markets for Russell Investments’ clients around the world,” Giannini said.
The London Stock Exchange (LSE) group finalised the sale of Russell in 2016 to a consortium of investors including US private equity firms TA Associates and Reverence Capital along with management in a deal valued at over US$1.1 billion. Post the sale, LSE retained the index arm, now known as FTSE Russell, it acquired as part of the US$2.7 billion purchase of the wider Frank Russell business in 2014.
A Russell spokesperson said “we do not publicly disclose our ownership stakes, but Hamilton Lane’s investment represents a minority interest”.
Morgan Stanley equity analyst, Michael Cyprys, noted in US media reports that Russell would likely “channel the majority of future private markets allocations to [Hamilton Lane] while still upholding its fiduciary responsibilities”.
“The partnership is also cost-effective, as [Hamilton Lane] will service Russell as if it were a large, single client, while Russell will continue to service the numerous underlying customer relationships,” Cyprys said. “Thus, providing [Hamilton Lane] with scaled distribution access.”
Russell was rumoured to be up for sale late in 2019 with TA Associates reportedly hiring Goldman Sachs to run the process. TA Associates, which also part-owns the Takapuna-based Fisher Funds, has been busy in these parts of late, snapping up a 51 per cent stake in Australian exchange-traded fund operator BetaShares. The Boston-headquartered private equity manager also has a shareholding in Yarra Capital, which recently absorbed the Nikko Asset Management Australia business.