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Rating:A $250B Alts Shop Buys Most of a Mutual Fund Biz Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, November 02, 2017

A $250B Alts Shop Buys Most of a Mutual Fund Biz

Reported by Neil Anderson, Managing Editor

An institutional alternative asset manager is making a bigger splash in the liquid space, buying a mutual fund subadvisor and half of its mutual fund shop ally. That ally, meanwhile, is refocusing on its other offerings.

Last month New York-based Brookfield Asset Management's public securities group unveiled a deal to buy Houston-based Center Coast Capital Holdings, as well as parts of Liberty Street Advisors and Liberty Street's HRC Fund Associates and HRC Portfolio Solutions. Watch for Brookfield to amp up its distribution through FAs thanks to the multi-part deal.

Pricing and terms of the deal were not disclosed. Berkshire Capital advised Brookfield on the deal, Sandler O'Neill and Partners advised CCCH affiliate Center Coast Capital Advisors, and Moelis & Company advised Liberty Street and HRC. Legal advisors on the deal include: Paul Hastings for Brookfield; Skadden, Arps, Slate, Meagher & Flom; Porter Hedges and Alston & Bird for Center Coast; and Lowenstein Sandler and Stradley Ronon Stevens & Young for Liberty Street and HRC. The deal is expected to close in Q1 2018.

Center Coast specializes in infrastructure investing, especially MLPs, and it subadvises several Liberty Street products, including the open-ended Center Coast MLP Focus Fund, which will move over to Brookfield as part of the deal. Liberty Street is the fund's advisor, and HRC is the third-party marketing and operations shop for Liberty Street's funds, so about 15 of Liberty Street and HRC's 30 people will also move over to Brookfield. The entire Center Coast Capital Holdings team, 12 people or so, will also join Brookfield.

"We are excited to join Brookfield's Public Securities Group, with its global resources, enviable track record and highly complementary investment approach," states Dan Tutcher, founder, principal, and senior PM of Center Coast.

Brookfield PSG, led by senior managing partner and unit CEO and CIO Craig Noble, focuses on investments listed in public markets, but still in real assets and other alternatives, and it has more than $15 billion in AUM and about 120 people. Like the overall company, PSG's clients are mostly institutional, though they do have some open-end mutual funds, as well some CEFs and a collective fund. The Center Coast-Liberty Street-HRC deal offers PSG both "a great investment team" and an opportunity to build its "wealth platform", i.e. advisor distribution, Noble tells MFWire. He calls it their "next big step" in advisor distribution. PSG president David Levi runs the Brookfield unit's distribution.

"We've had a few people internally that have been working on this channel, and we've also worked with some third parties in the past," Noble says of Brookfield PSG's advisor distribution. "This is our first large, dedicated internal effort to do this."

"Once the deal closes, we're going to have a sizable group and some good investment products for this channel," Noble adds. "We're going to have a great platform for taking us forward."

"We have built a very good franchise in the wirehouses," Victor Fontana, president of Liberty Street and HRC, tells MFWire, calling it "a natural move" for much of his team to join Brookfield as part of the deal.

"It's just a very good fit all around," Fontana adds.  

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