FS Investments, a pioneer in the democratization of alternative investments with more than $35 billion in assets under management, and Portfolio Advisors, a global middle-market private asset specialist with more than $38 billion in assets under management, today announced they have entered into a definitive agreement to combine their firms. The combined company will be poised for growth with over $73 billion in assets under management, including a significant permanent capital base, and a robust distribution platform. Together, FS Investments and Portfolio Advisors will meet increasing investor demand for alternatives with a diversified suite of alternative investment solutions for both institutional and individual investors.
Michael Forman, Chairman and CEO of FS Investments, commented, “I am thrilled to join forces with Portfolio Advisors and applaud our team, led by our Co-Presidents, Enrico Gaglioti and Mike Kelly, for identifying an ideal strategic partner. This transaction is transformative for FS Investments, accelerating our efforts to broaden our institutional client base, diversify our offerings to include growth-oriented products such as private equity, and deepen our in-house investment capabilities. This combination also enhances our financial profile, diversifies our revenue streams and positions us to invest in further growth.”
Brian Murphy, Co-Founder of Portfolio Advisors, added, “This partnership provides significant new resources that will help support our global institutional clients. At the same time, FS Investments’ deep product development expertise and robust distribution platform will bring our leading private markets investment strategies to a broader audience. This combination presents a unique opportunity to expand our reach, launch new strategies and drive growth while providing continuity for our first-rate investment teams and institutional clients.”
Founded in 1994 to serve institutional investors, Portfolio Advisors offers a variety of innovative investment solutions across private equity, private credit and private real estate. The firm manages a broad range of strategies including direct, secondary, and primary investments and junior and senior credit. Portfolio Advisors also provides institutional clients customized discretionary and non-discretionary portfolio management across its core strategies. Most recently, Portfolio Advisors launched its MVP Private Markets Fund, a registered private equity fund with more than $500 million in assets, which is structured for both wealth management and institutional clients.
FS Investments was founded in 2007 with the mission to provide individual investors access to alternative sources of income and growth historically available only to large institutions and the ultra-wealthy. Today, the firm manages a suite of alternative strategies including private credit, real estate credit, opportunistic credit, structured credit, liquid credit and liquid alternatives across a variety of fund structures including business development companies, non-traded REITs and interval, closed-end and mutual funds. FS Investments distributes its funds through an extensive wealth management distribution platform, with hundreds of selling agreements across the wirehouse, RIA and independent broker-dealer channels. In recent years, the firm also launched in-house managed, institutionally focused credit strategies, using CLO and draw-down structures.
Strategic Rationale
- The combined firm will have a well-diversified suite of investment capabilities across alternative asset classes and strategies, including private equity, private and liquid credit, private real estate and liquid alternatives.
- The combined firm will serve institutional and wealth management clients across the globe, bringing together Portfolio Advisors’ extensive institutional client network and international distribution capabilities across North America, Europe and Asia with FS Investments’ broad wealth management distribution reach across the wirehouse, RIA and independent broker-dealer channels.
- FS Investments will expand Portfolio Advisors’ access to wealth management channels, unlocking near-term opportunities for Portfolio Advisor’s MVP Private Markets Fund and feeder funds for other Portfolio Advisors strategies.
- FS Investments and Portfolio Advisors expect to grow existing lines of business while exploring new opportunities to deliver on the shared vision of providing both institutional and wealth management clients a full suite of alternative investments.
- The combined firm will have over $73 billion in assets under management and will be well positioned for growth with a robust financial profile, including a large permanent capital base, strong margins and diverse revenue streams.
Transaction Details
- Portfolio Advisors will become the institutional investment arm of FS Investments and will continue to operate with its full complement of employees and its offices in Darien, Dallas, London, Zurich, Hong Kong and Singapore.
- FS Investments’ and Portfolio Advisors’ executives will have representation on senior leadership committees across both organizations.
- The transaction is expected to close in the first half of 2023, subject to applicable regulatory approvals and other customary closing conditions.
UBS Investment Bank served as lead financial advisor and Cravath, Swaine & Moore LLP served as primary legal advisor to FS Investments on the transaction, with Dechert LLP serving as special regulatory counsel. Goldman Sachs & Co. LLC and Mizuho Americas also served as financial advisors to FS Investments. Moelis & Company LLC served as financial advisor and Simpson Thacher & Bartlett LLP served as legal advisor to Portfolio Advisors on the transaction, with Schulte Roth & Zabel LLP serving as special regulatory counsel. Terms of the transaction were not disclosed.
About FS Investments
FS Investments is a leading asset manager dedicated to helping individuals, financial professionals and institutions design better portfolios. The firm provides access to alternative sources of income and growth, and focuses on setting industry standards for investor protection, education and transparency. FS Investments has 350 employees and is headquartered in Philadelphia, PA with offices in New York, NY, Orlando, FL and Leawood, KS.
About Portfolio Advisors
Portfolio Advisors, LLC is a middle-market private asset management specialist that builds value for its clients and partners through a variety of investment programs in private equity, private credit and private real estate. The firm’s customized approach to private markets investing has led to high investor retention and broad recognition in the institutional investment consulting arena. Headquartered in Darien, CT, Portfolio Advisors has over 130 employees worldwide, with additional offices in Dallas, London, Zurich, Hong Kong and Singapore.
