A Holding Co Buys Into a 12-Fund Shop and Keeps Hunting
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Friday, August 07, 2020

A Holding Co Buys Into a 12-Fund Shop and Keeps Hunting

A holding company that backs institutional asset managers is investing in a subadvised, liquid alts-focused mutual fund shop. And the folks at the holding company are still on the hunt for more AMs to bet on.

Darrell W. Crate
Easterly / James Alpha Advisors
Managing Principal / CEO
On Tuesday, Darrell Crate, managing principal of Easterly, and Kevin Green, managing partner of James Alpha Holdings (parent of James Alpha Advisors), confirmed that Easterly has acquired a minority stake in New York City-based James Alpha Advisors. The deal closed in May, and Crate and Michael Collins, Easterly's global head of distribution, will join the fund firm as CEO and distribution chief, respectively.

"We're always looking for more high quality managers to partner with and complement our product set," Crate tells MFWire, hinting at future deals. "The two product slots we'd like to fill are an international manager and a long-only growth manager."

And long-term, Crate has the option of doubling down on James Alpha.

"We have an ability to ultimately earn control based on growth targets," Crate says.

Greene will now serve as chairman of James Alpha Advisors' new board of directors. Crate and Denis Nayden, chairman of James Alpha Holdings and a major shareholder, will join James Alpha Advisors' new board, too. James Vitalie will step down as the fund firm's CEO but stay on as president, reporting to Crate.

As part of the deal, the Easterly team is assuming operational control of James Alpha Advisors, which had about $1.1 billion in AUM and 12 mutual funds as of March 31, with a team of about 25 people. Eight people from Easterly will come over and be "entirely dedicated" to James Alpha, Crate says.

"Our job is to help them scale," Crate says. "The whole James Alpha team is intact, and they've been running a fine business."

"Easterly is providing growth capital and operational expertise that will enable us to drive growth, improve operational efficiencies, develop new markets and enhance our client experience," Green states. "The investment by Easterly will enable James Alpha Advisors to generate greater scale, broaden our product line and expand distribution."

For now, Crate says, the Easterly team will focus on boosting distribution of three key James Alpha funds: the James Alpha Global Real Estate Investment Fund, the James Alpha Managed Risk Domestic Equity Fund, and the James Alpha Structured Credit Value Fund. Meanwhile, they'll incubate the firm's other nine funds for now.

"We want to be bringing institutional products to the high net worth channel," Crate says, pointing to wirehouses and independent RIAs as key targets.

Crate previously spent more than a decade as CFO of AMG (an acquisitive backer of institutional asset managers) and treasurer of Mitt Romney's presidential campaigns. He founded Easterly in 2009, and the firm's aim is "to seed or sponsor ideas in the investment management industry."

Easterly's family includes investments in four institutional asset managers (including Levin Easterly, a long-only value manager), a $2-billion REIT, and more.

"We know a lot about real estate and own some institutional managers. Today we have a SPAC fund, and we're also raising some money around chemical tankers and marine logistics," Crate says. "But we've never had a retail platform."

Crate sings the praises of the James Alpha Advisors team for working with strong subadvisors.

"They're some of the very best managers that I've seen on any platform," Crate says. "This is rounding out our firm with a retail set of products, and it's a terrific platform. They've built a very high quality platform."

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