T. Rowe Price Group has agreed to acquire alternative credit manager Oak Hill Advisors (OHA) in a bid to foray into the alternative investment markets.
The baltimore-based asset manager is purchasing 100% of the equity of OHA and related entities in a cash and stock deal valued at $4.2bn.
Rowe intends to run OHA as its private markets platform as an increasing number of institutional as well as individual investors seek exposure to the sector.
The platform is expected to enhance T. Rowe’s ongoing strategic investments in its core investments and distribution capabilities while complementing its existing global platform.
T. Rowe Price CEO Bill Stromberg said: “OHA meets the high bar we have set for inorganic opportunities, and their proven private credit expertise will help us meet our clients’ demand for alternative credit.”
As of 31 July 2021, OHA had $53bn of capital under management across its private, distressed, special situations, liquid, structured credit, and real asset strategies. It has over 300 employees globally.
Under the agreement, OHA will operate as a separate business within T. Rowe and maintain autonomy over its investment process.
Rowe will provide $500m for co-investment and seed capital alongside OHA management and investors.
OHA will work with T. Rowe to develop new products and strategies for the latter’s wealth and retail channels, including its bank, broker-dealer, RIA, and platform businesses.
The companies also plan to explore additional alternative asset categories in the future.
OHA founder and CEO Glenn August said: “T. Rowe Price and OHA share a consistent approach, focusing on investment excellence, integrity, collaborative culture, and client partnership, that will help us build a stronger combined organisation.”
In March this year, T. Rowe Price launched an investment research office in Shanghai to strengthen its research coverage.