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Wednesday, December 18, 2019

FS Will Buy a Four-Year-Old MF Startup

News summary by MFWire's editors

A 12-year-old alternative asset manager with a mutual fund business and more than $24 billion in AUM is preparing to buy a four-year-old startup mutual fund firm with about $1.8 billion in AUM.

Michael C. Forman
FS Investments
Chairman, CEO
Yesterday Michael Forman, chairman and CEO of FS Investments, confirmed that the Philadelphia-based firm has agreed to acquire New York- and Kansas City-based Chiron Investment Management, which specializes in "quantamental" (quantitative and fundamental) investing. The deal, pricing and terms of which were not disclosed, is expected to close in Q1 2020.

P&I, the Philadelphia Business Journal, and Reuters all covered the deal.

Chiron CEO Enrico Gaglioti and Chiron chief investment officer Ryan Caldwell are both expected to join FS after the deal, with Caldwell and his team continuing to manage Chiron's three funds.

Chiron launched in 2015, a year after Caldwell left Ivy, as a joint venture between Caldwell and GPS Investment Partners, with GPS' Marc Spilker as Chiron's chairman, GPS' Scott Prince as vice chairman, and GRP' Gaglioti as CEO. As of Chiron's most recent form ADV, filed in May 2019, the firm had 30 employees (not counting clerical staff) and about $2.4 billion in AUM.

Chirons owners and officers listed in that recent filing include: Caldwell, Gaglioti, Prince, and Spilker, as well as chief operating officer John Armenio, distribution chief Kirsten Pickens, chief compliance officer Kristen Richards, chief risk officer Chih-Chia Wen, and holding company Chiron Global Investors. Chiron Global Investors, in turn, is listed as being owned by: BX1 LLC (which is owned by Caldwell), Caldwell, Gaglioti, and GPS Asset Management, LP (which is owned by Gaglioti, Spilker, and GPS AM GP, LLC, which in turn is majority-owned by Gaglioti).

"This is a unique opportunity to diversify our investment management business and expand distribution with a firm that shares our culture, has a high-quality management team and offers a differentiated investment approach," Forman states.

Mike Kelly, president and CIO of FS, lauds the Chiron team for their "deep expertise in multi-asset investing, quantitative and fundamental investment analysis and dynamic portfolio construction."

"We look forward to working together to further develop model portfolios and other creative solutions for our clients," Kelly states.

Caldwell puts the deal in the context of asset managers' "need to provide solutions that combined differentiated traditional asset management and alternatives."

"This transaction positions us to be an industry leader in this regard," Caldwell states. 

Edited by: Neil Anderson, Managing Editor

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