One of DST's
subsidiaries is preparing to buy a longtime asset manager ally in the second half of this year.
On Tuesday Ned Burke
, CEO of ALPS Holdings
a deal to spend up to $65 million to buy Red Rocks Capital
. That price tag translates into 4.83 percent of Red Rocks' $1.347 billion in assets under advisement (as of February 28). Red Rocks' index business also powers another $497 million in ETF assets.
The Denver Business Journal
and the Kansas City Star
both reported on the deal.
Deutsche Bank Securities
advised Red Rocks on the deal. On the legal side, Red Rocks was counseled by Vedder price
and DST was counseled by Skadden, Arps, Slate, Meagher & Flom
(founded in 1985) is based in Denver, and Red Rocks
(founded in 2003 by Mark Sunderhuse
and Adam Goldman
) is based in nearby Golden, Colorado. Publicly-traded DST is based in Kansas City, Missouri.
The Red Rocks team claims to be "the first and largest domestic money manager to package listed private equity products in a '40-Act structure." It also runs the Red Rocks Global Listed Private Equity Index
for benchmarking publicly-traded private equity firms.
Red Rocks has subadvised the ALPS|Red Rocks Listed Private Equity Fund
since inception at the end of 2007. That four-star
mutual fund now holds $514.5 million, nearly a third of ALPS' $1.596 billion in mutual fund assets (as of June 30, 2014, and excluding money market funds).
The ALPS team plans to keep Goldman and Sunderhuse on to co-PM the Red Rocks strategy. Burke describes the deal as giving ALPS "a distinct edge in the alternative investments marketplace," and ALPS Advisors president Tom Carter
predicts that ALPS and Red Rocks "are going to do great things together for the investment community."
"As part of ALPS and the DST Enterprise, we'll be in far greater position to expand the breadth and reach of Red Rocks' offerings," Goldman states.
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