Schroders has agreed to acquire NewFinance Capital, a London-based manager of funds of hedge funds, for $101 million in cash and up to a fur...

Schroders has agreed to acquire NewFinance Capital, a London-based manager of funds of hedge funds, for $101 million in cash and up to a further $41 million contingent on revenue targets being met over a four year period. At 31 December 2005, NewFinance Capital had assets under management of approximately $2.5 billion with net revenues of approximately $20 million for the year. NewFinance Capital which was founded in 2002, has developed rapidly with a product range in the multi-strategy and fixed income areas and more recently in credit, commodities and equities. Its management team of Marc Hotimsky, Georges Saier and Thorkild Juncker presides over a staff of 28 and is based in London,with a research office in New York. Its clients are European, Middle Eastern and Japanese institutions, distributors and high net worth investors. Schroders and NewFinance Capital have agreed to combine their funds of hedge funds activities under NewFinance Capital's management to create global funds of hedge funds business with a new total of $3.2 billion of assets under management. NewFinance Capital will become a wholly-owned subsidiary of Schroders operating as a separate company within the Schroder Group. It will retain its brand identity and senior management will continue in their existing roles. NewFinance Capital's existing Opus Fund range and investment process will remain unaffected, and the Schroders funds of hedge funds business will continue to be managed by the current team before combining with NewFinance Capital after closing. The transaction is expected to be broadly neutral to Schroders' 2006 earnings after the amortisation of intangible assets, according to the company. "This acquisition increases our exposure to alternative investments, broadens our product offering to clients with a range of institutional quality funds and gives us critical mass in an asset class which we believe will continue to be in demand by high net worth and, increasingly, institutional investors," said Michael Dobson, chief executive of Schroders, in a statement.