Northill to acquire Strategic Investment Group from FFL Partners

Northill Capital has agreed to acquire a majority stake in Strategic Investment Group from FFL Partners. No financial terms were disclosed. Based in Arlington, Virginia, Strategic is a provider of outsourced CIO solutions. Morgan Stanley was financial adviser to Strategic on the transaction.

PRESS RELEASE

London, 20 December 2018: Northill Capital (“Northill”) today announces it has agreed to purchase a majority stake in leading outsourced CIO (OCIO) business, Strategic Investment Group (“Strategic”) by acquiring the equity interest previously held by FFL Partners for an undisclosed sum. This partnership enables Strategic to build on its 31 years of operating independence as a leading provider of OCIO solutions through the support of Northill’s permanent and patient capital base.

Strategic, founded in 1987 and based in Arlington, Virginia, is the largest independent investment manager dedicated to the OCIO sector, with discretionary AUM of over US$28 billion. Strategic has delivered compelling performance for clients across market cycles and successfully transitioned to the second generation of its investment team. Acting as a seamless extension of clients’ investment teams and employees, the firm provides customized fiduciary solutions for clients.

As a result of the transaction, Strategic’s existing senior management and investment team will increase their direct ownership of the business to over 25%, with further increases expected in the years to follow. Northill seeks to ensure that culturally and operationally successful management teams retain the autonomy to continue to run their businesses. Strategic will keep day-to-day operational independence, and members of the Northill management team will join its Board of Directors. Strategic’s 96 employees will remain in Arlington, Virginia, thereby enabling the preservation of its distinctive culture.

OCIO services are a growing part of the investment management industry. Strategic, as a leader in this segment, provides high-quality, independent, customized solutions which are highly attractive to its pension, foundation, endowment, healthcare and sovereign wealth clients. Through its centralized, institutional investment process, the firm’s approach combines active portfolio management, rigorous risk management and open architecture manager selection.

Strategic’s partnership with Northill provides the support and autonomy necessary for Strategic to achieve long-term outperformance and sustainable growth. The transaction will see Northill’s AUM increase to over US$84 billion from US$56 billion at 30 November 2018, in its sixth acquisition to date.

Brian Murdock, Chief Executive of Strategic Investment Group, said:
“From its inception in 1987, Strategic has used private capital to back our leadership team so we can remain aligned with the long-term interests of our clients. As an OCIO industry pioneer, we appreciate that our operating independence is critical to preserving a disciplined focus on client outcomes while avoiding distractions that might conflict with that mission.

“This new partnership with Northill gives us access to permanent and patient capital and deep industry expertise that will support and perpetuate our success as an independent firm, while providing an internal mechanism for the firm’s management to increase its ownership of the firm in the years ahead.

“We thank FFL Partners for their tremendous support and collaboration over the past six years. Our partnership with FFL ensured that Strategic was able to not just continue to operate as an independent OCIO leader, but also to grow our firm, enhance our practices and maintain our strong reputation.”

Jon Little, Partner, Northill Capital LLP, said:
“Strategic Investment Group is the gold standard independent investment firm in the OCIO/Solutions sector with a track record of success spanning over three decades. Strategic’s investment-led approach and belief in value creation through active management is highly complementary to Northill’s approach and brings diversification to our investment portfolio.

“Northill’s investment in Strategic is consistent with our strategy to invest over the long-term in high-quality active investment businesses that create a strong strategic and cultural fit with Northill.

Strategic has built a passionate, talented, collegial team and the management team’s increased ownership of the business is a strong vote of confidence in its future and that of the sector.

“As an owner alongside management, our focus is on being a long-term supportive partner, and we will work jointly with Strategic to ensure the business continues to grow and develop in a sustainable way whilst maintaining its independence, client-focused culture and strong investment performance.”

Morgan Stanley & Co. LLC served as financial advisor to Strategic Investment Group.