Alternative investment consultant Aksia announced Wednesday an agreement to acquire TorreyCove Capital Partners, a San Diego-based advisory firm specializing in private equity and real assets.
The transaction, expected to be closed within the first half of this year, will create an alternatives-focused consulting firm with more than $160 billion under advisement and about 240 employees globally, including 150 investment research and risk management professionals.
Speaking to Institutional Investor by phone, Aksia’s chief executive officer Jim Vos said the deal was motivated by each firm’s complementary expansion goals. Aksia, a global advisory firm specializing hedge funds and private credit, had wanted to broaden its private markets coverage, while TorreyCove — a private equity and real assets consultant with offices in San Diego and Boston — had been eyeing a larger geographic footprint.
“For both firms, it just made sense,” Vos said. “There’s virtually no overlap.”
The acquisition marks the latest deal in a recent wave of consulting firm mergers and acquisitions, but is unique in that it combines two alternatives specialists. Other recent transactions include Meketa’s purchase of Pension Consulting Alliance early last year and Goldman Sachs Asset Management’s 2018 acquisition of Rocaton. Also in 2018, investment consulting giant Mercer bought both Summit Strategies Group and Pavilion Financial’s investment consulting and alternatives consulting businesses.
[II Deep Dive: Fund Evaluation Group Is Not for Sale, New Leader Vows]
According to Vos, much of the M&A activity within the broader investment consulting industry has been driven by firms seeking to build out their outsourced-CIO businesses or by “first-generation consulting firm leaders retiring or moving on.” Neither applies to the TorreyCove acquisition: Vos and TorreyCove CEO David Fann — who both have ”no interest in retiring” — will stay on in the combined firm, with Fann taking on the role of vice chairman. In addition, TorreyCove’s five managing directors will join Aksia as partners.
As for the other factor driving M&A, Vos said that the two firms — which do not currently offer discretionary products — have “no interest in going OCIO.”
Instead, Vos and Fann said the combination of their firms will simply provide clients with a larger scope of alternative investment research and advisory services.
“Our intention is to create a platform that allows clients to have a viewpoint on private credit, hedge funds, private equity… it’s a tremendous information advantage,” Fann said.