ALPS Holdingssaid Tuesday it agreed to buy Red Rocks Capital LLC. The $65 million purchase price includes a combination of up-front cash consideration and performance-related contingent consideration. Golden, Colorado-based Red Rocks has been sub-adviser to the ALPS|Red Rocks Listed Private Equity Fund from its inception in 2007. Deutsche Bank Securities advised Red Rocks.
DENVER, April 7, 2015 /PRNewswire/ — ALPS, a DST Company that provides products and services to the financial services industry, today announced it has agreed to acquire asset manager Red Rocks Capital LLC, a leader in listed private equity and other private asset investments.
The purchase price of up to $65 million will consist of a combination of up-front cash consideration and performance-related contingent consideration. The transaction will be funded using a combination of cash and short-term borrowings on revolving credit lines.
The closing of the transaction is expected to occur in the second half of 2015.
Red Rocks, founded in 2003 by Adam Goldman and Mark Sunderhuse, is the first and largest domestic money manager to package listed private equity products in a ’40-Act structure. The firm manages and advises $1.8 billion in assetsi through a variety of product structures, including mutual funds, sub-advised relationships, separately managed accounts, and select variable annuity contracts.
“Acquiring a best-in-class manager like Red Rocks Capital gives us a distinct edge in the alternative investments marketplace,” saysNed Burke, CEO of ALPS Holdings, Inc. “This transaction represents an important step in our ongoing asset management strategy.”
Golden, Colorado-based Red Rocks has been sub-adviser to the ALPS|Red Rocks Listed Private Equity Fund from its inception in 2007. The offering is now one of the largest actively-managed mutual funds in the U.S. that focuses on providing access to listed private equity investments.
“We have come to know the Red Rocks team quite well over the years,” says Tom Carter, President of ALPS Advisors, Inc. “Everything in our experience tells us that ALPS and Red Rocks are going to do great things together for the investment community. I’m confident this acquisition will benefit all parties involved over the long term.”
Goldman and Sunderhuse, who collectively represent more than 60 years of experience in private equity and public fund management, are expected to continue in their roles as co-managers for the Red Rocks strategy.
“Our goal has always been to provide investors and financial professionals with access to one of the world’s most desired asset classes,” says Goldman. “As part of ALPS and the DST Enterprise, we’ll be in far greater position to expand the breadth and reach ofRed Rocks’ offerings.”
In addition to its investment products, Red Rocks also created and maintains the Red Rocks Global Listed Private Equity Index, a benchmark for private equity firms that are publicly traded on nationally-recognized exchanges worldwide.
DST, ALPS’ parent company, expects the transaction to result in an $0.08 to $0.10 dilution of earnings per share for the 12 months following the acquisition and be slightly accretive to earnings per share in the subsequent 12 months. The dilution following acquisition is driven by the amortization of acquired intangible assets and by the expense recognition associated with the estimated future performance-related payments due to the principals of Red Rocks.
Deutsche Bank Securities Inc. acted as financial advisor and Vedder Price acted as legal counsel to Red Rocks Capital on the transaction. Skadden, Arps, Slate, Meagher & Flom acted as legal counsel to DST and ALPS on the transaction. The acquisition is subject to certain agreed upon conditions precedent and customary closing conditions and approvals.
Through its subsidiary companies, ALPS Holdings, Inc. is a leading provider of innovative investment products and customized servicing solutions to the financial services industry. Founded in 1985, Denver-based ALPS delivers its Asset Gathering and Asset Servicing Solutions through offices in Boston, New York, Seattle, and Toronto. ALPS is a wholly-owned subsidiary of Kansas City-based DST Systems, Inc. For more information about ALPS and its services, visit www.alpsinc.com. Information about ALPS products is available at www.alpsfunds.com.
DST Systems, Inc. is a leading provider of sophisticated information processing and servicing solutions to companies around the world. Through its global enterprise, DST delivers strategically unified transactions and business processing, data management, and customer communications solutions to the asset management, brokerage, retirement, and healthcare markets. Headquartered in Kansas City, MO, DST is a publicly-traded company on the New York Stock Exchange. For more information, visit www.dstsystems.com.
i Measured as of February 28, 2015. Assets include $1,347 million of assets under advisement and $497 million ETF assets for which Red Rocks Capital LLC is paid an index license fee.