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Rating:A California Fund Firm Moves Forward on an Acquisition Not Rated 5.0 Email Routing List Email & Route  Print Print
Tuesday, February 24, 2009

A California Fund Firm Moves Forward on an Acquisition

Reported by Armie Margaret Lee

Forward Management [see profile], the San Francisco-based investment adviser to the Forward Funds, is acquiring the Kensington Funds from the Kensington Investment Group. The deal, expected to close in April, will bring the number of funds in Forward's lineup to 35. The combined fund family will have north of $3.7 billion in AUM.

Allan Reid
Forward Management
In an interview with The MFWire, Forward CEO Alan Reid said the deal bolsters Forward's in-house asset management capability and opens up distribution in the independent broker-dealer channel.

He declined to discuss the purchase price.

Talks between Forward and Kensington began last fall, Reid said. The market conditions, he said, yielded "unique opportunities" for deal-making.

John Kramer
Kensington Investment Group
President and Co-CIO
"The current market conditions allowed us to move things forward quicker," he added. He also pointed out that "prices of asset managers have not gone up in the marketplace."

Forward's legal adviser on the deal was Paul Hastings. Neither Forward nor Kensington used a banker.

Forward plans to hire 22 employees from Kensington, 10 of which are in portfolio management and the rest are sales and marketing employees.

This marks Forward's fourth acquisition in the mutual fund space since 2004. Forward acquired Accessor Capital Management last year (see The MFWire, 06/04/08), three funds from Emerald Asset Management in 2005 (see 03/17/05), and two funds from Pictet International Management in 2004 (see 10/22/03).

"We have been looking to continue to grow our assets," Reid said, adding that Forward attracted $1 billion in new assets, most of which are mutual fund assets, in each of the last three years.

Forward was founded in 1998 with the backing of Gordon Getty, an heir to the Getty oil fortune.
Company Press Release

SAN FRANCISCO--(BUSINESS WIRE)--Forward Management, LLC, investment advisor to the Forward Funds, will add the Kensington Funds from the Kensington Investment Group, Inc. to the Forward Funds series. The addition, pending shareholder approval in April, would create a combined fund family offering investors 35 mutual funds in no-load and load-share classes with more than $3.7 billion in assets under management.

"Kensington's investment team has built deep expertise in global real estate and infrastructure -- the Global Infrastructure Fund invests in companies that may benefit from economic stimulus packages and the Select Income Fund offers investors the potential to generate significant income," said J. Alan Reid, Jr., chief executive officer of Forward Management. "These portfolios complement Forward's extensive roster of funds and offer investors further opportunities to diversify their portfolios with income-oriented products," he added.

Following shareholder approval, Kensington Funds will be branded as Forward Funds. The Kensington Select Income Fund (KIFAX), the Kensington Global Infrastructure Fund (KGIAX) and the Kensington Strategic Realty (KSRAX), will maintain their investment strategies and continue to be managed by current portfolio managers.

Kensington's Global and International Real Estate Funds (KGFAX, KIRAX) will merge to create the Forward International Real Estate Fund. The portfolio will continue to be co-managed by Paul Gray and Michael McGowan. Additionally, Kensington Real Estate Securities (KREAX) Fund will merge into Forward Real Estate Fund1 (FFREX/FPREX). Forward Real Estate Fund was launched in 1999 and has a solid, long-term track record of investing in U.S. real estate management companies using a core-focused approach. The fund is managed by Richard Imperiale, a veteran of real estate investing. The management transition of these funds will bring additional expertise and resources that will allow Kensington's real estate investment team to gain an increased focus on the international arena.

"Joining forces with Forward will provide our team with the resources and capacity to run our funds more effectively and efficiently, while allowing us to focus further on performance and clients," remarked Kensington president, John Kramer.

"With low valuations in real estate and the potential for substantial yield opportunities these portfolios offer investors focused on retirement additional alternatives," added J. Alan Reid, Jr., chief executive officer of Forward Management. "This strategic transaction will expand our organization, allowing us to better serve our shareholders, and supporting our strategy of investing in companies and products that enhance and diversify our offerings," he concluded.

The acquisition of the Kensington Funds marks Forward Management's third acquisition in the last year. Forward acquired Accessor Capital Management LP (Accessor), investment advisor to the Accessor Funds in 2008, as well as the assets of Berkeley Capital Management, LLC (Berkeley) including the investment portfolios and team responsible for managing the Global Dividend, International Dividend, U.S. Dividend and SmallMid Core Portfolios.

This transaction also will significantly expand Forward's income/dividend-oriented product offerings. The Kensington portfolio management team will join the teams from Berkeley and Accessor, further strengthening Forward's internal asset management capabilities.

About Forward Management, LLC

Forward Management, LLC, based in San Francisco, is the investment advisor to the Forward Funds and the Accessor Funds. The firm also markets a range of separately managed accounts. Forward Management offers institutional money managers, financial advisors and individual investors access to industry leading investment managers, investment products and services. The firm specializes in identifying sub-advisors who have long track records of managing assets in specific investment disciplines and asset classes. More information on Forward Management and the Forward Funds can be found at www.forwardmgmt.com.

About Kensington Investment Group

Kensington Investment Group, Inc. is a registered investment adviser specializing in global securities investment management focused in real estate, infrastructure and senior securities. Founded in 1993 by principals who have worked together managing portfolios since the mid-1980s, Kensington applies a fundamental, value-driven investment methodology to industries that generate stable, growing income streams and offer the opportunity for long term growth. More information on the Kensington Funds can be found at www.kig.com.

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