Big news on the alternatives front this morning: T. Rowe Price agreed to acquire Oak Hill Advisors for up to $4.2 billion. Oak Hill Advisors will become the private markets platform of T. Rowe Price, with the company agreeing to commit $500 million for coinvestment and seed capital alongside OHA management and investors.
Oak Hill Advisors (as distinct from Oak Hill Capital Partners) is a private credit manager that works in distressed, special situations, liquid, structured credit and real assets strategies. OHA manages about $53 billion in capital.
The price will be split up, with $3.3 billion payable upon closing, 74 percent of which would be in cash and 26 percent in T. Rowe common stock. Another $900 million in cash would be paid upon achievement of certain business milestones starting in 2025.
OHA will have autonomy over its investment process as a standalone business within T. Rowe Price. Glenn August, founder and CEO of Oak Hill Advisors, will continue in his role and is expected to join T. Rowe’s board and management committee. All members of OHA’s partner management team will sign long-term agreements and continue to lead the business. Read more here on PE Hub.
More time: We’ve noticed a convergence of worlds here at the Hub, which I believe is a reflection of what is happening at some investment banks. We’re seeing the secondary world, which has traditionally been the exclusive domain of a select specialist group of investors, collide with the M&A world. Investment bankers are asking us questions about the structure of continuation funds and secondaries buyers are talking to me about M&A processes.
Credit Suisse set a marker last year when it merged its GP-led secondaries advisory group with its efforts to source capital for direct and coinvestments. “We saw an overlap between secondary investment advisory and our direct placement business,” Jeremy Duksin, a managing director at the bank, told Buyouts last year. “It became increasingly clear that merging these two activities… made more sense.”
Yesterday Sarah and I wrote about Sevita, backed by Centerbridge Partners and Vistria Group, which is going through a minority stake sale and then will be moved through a single-asset deal. Today I have a story about NewSpring Capital running a process to move healthcare IT company Verisma out of an older fund and into a continuation pool for more time and capital to grow the business.
The single-asset process also will include a shot of fresh capital into NewSpring’s fourth healthcare fund, which is targeting $175 million. Read more here.
That’s it for me! Have a great rest of your day. Hit me up with tips n’ gossip, feedback, insider stuff, The Drama or whatever at email@example.com or find me on LinkedIn.