AGF buying majority stake in alternative investment firm Kensington Capital

AGF Management Ltd. has signed a deal to buy a 51% stake in alternative investment firm Kensington Capital Partners Ltd. for $45 million.

Kensington employees will keep a 49% stake in the firm, with ownership broadly held by Kensington’s three senior managing directors.

If certain near-term growth targets are achieved, Kensington will receive an additional earn-out payment.

Founded in 1996, Kensington has $2.6 billion in assets under management (AUM), with offices in Toronto, Calgary and Vancouver.

AGF says Kensington will maintain its investment and operational independence but receive strategic support as part of the relationship.

Ash Lawrence, head of AGF Private Capital, will become chairman of Kensington’s board of directors. Judy Goldring, AGF’s president and head of global distribution, and Ken Tsang, AGF’s chief financial officer, will also join the board alongside Kensington’s three senior managing directors — Tom Kennedy, Richard Nathan and Eamonn McConnell.

The move is the latest example of asset managers acquiring or partnering with private investment firms, from TD Asset Management’s 2018 acquisition of Greystone Managed Investments to Mackenzie Investments buying a 49.9% non-controlling voting interest in Northleaf Capital Partners Ltd. in 2020.

Last week, BlackRock Inc. agreed to buy alternative manager Global Infrastructure Partners for US$12.5 billion.

Canadian fund managers have recently been introducing open-ended or evergreen private market funds to appeal to high-net-worth retail investors.

In a release on Monday, Kennedy said AGF’s size ($42.8 billion in AUM), distribution reach and product development expertise make the firm an ideal partner as Kensington looks to expand beyond Canada and launch new products.

Lawrence said the partnership would help AGF build out its private markets business.

Kensington has “strong relationships that fit well within AGF’s target channels and [has] built a growth-oriented business that mirrors AGF’s goal of accelerating the growth of our private markets business,” he said.