Philadelphia-based FS Investments, which raises cash from individual investors to finance companies, has agreed to purchase Darien, Conn.-based Portfolio Advisers, a private-equity investor for institutions such as the Pennsylvania state teachers’ pension fund (PSERS). They have agreed to combine into a single company so they can sell their products to individual and institutional investors.
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The combined companies will employ about 500 and manage around $73 billion. Terms of the acquisition have not been made public by the firms’ founders/owners. They hope to close the deal by June.
Michael Forman, a Philadelphia lawyer who founded FS with Philadelphia developer David Adelman in 2007, will head the combined companies as chairman and chief executive officer. Brian Murphy, cofounder of Portfolio Advisors, will continue to run that business.
“I am thrilled to join forces,” Forman said in a statement. The deal should make it easier for FS to sell its debt and equity investments to pension funds and other institutional investors, he added.
Portfolio Advisors was founded in 1994 as an adviser to pensions and other investment funds before it began selling them its own private-equity products.
The merger comes at a time when private-equity, private-debt and private real estate fund managers such as Portfolio Advisors have been hoping to attract more individual investors to supplement what has become a crowded market for institutional cash.
FS will bring Portfolio Advisers “significant new resources” that will help the firm boost sales abroad, where it has a network of offices, Murphy said. He called it “a unique opportunity to expand our reach.”
FS was launched by its founders in an effort to “democratize” investments in private companies. Its current funds include a range of private credit funds, business-development companies, closed-end real estate funds, and other products sold through outside brokers.
Besides PSERS, Portfolio Advisors’ public-sector clients include the Missouri and Utah state retirement systems and city workers’ funds in Los Angeles and El Paso.
Portfolio Advisors, which employs more than 130 and manages around $38 billion, will continue to operate from Connecticut and its branch offices in Dallas, London, Zurich, Hong Kong and Singapore.
FS (which stands for Franklin Square), which is based at its headquarters in the naval base business center in South Philadelphia and has branch offices in New York, Orlando, and Leawood, Kan., manages around $35 billion and employs around 350.
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