AGF Management Limited’s (AGF) private markets business signed definitive agreements to acquire a majority interest in Kensington Capital Partners Limited – one of Canada’s leading alternative investment firms, as part of AGF’s strategic imperative to grow its private markets business.
Launched in 1996, Kensington has $2.6 billion in assets under management and a 27-year history of successful performance and growth. The 40-member team has a track record of successfully managing private equity investments across mid-market buyouts, growth strategies, and venture capital. Kensington also employs a hybrid investment strategy across Fund of Funds, co-investments, and direct investing, providing investors with well-diversified exposure to private markets. The company has a history of innovation stemming from the development and launch of Canada’s first open-ended private equity fund over ten years ago, the Kensington Private Equity Fund.
Kensington will retain the investment and operational independence as part of AGF and will also receive significant strategic support from AGF as part of the relationship. AGF’s strategic investment aims to accelerate the growth of Kensington’s business while preserving the core values and entrepreneurial culture that has driven the success of Kensington’s investment programs to date. Kensington’s three Senior Managing Directors, Tom Kennedy, Richard Nathan, and Eamonn McConnell, will continue managing the business in their leadership roles, working closely with Ash Lawrence, Head of AGF Private Capital, and the Kensington Board of Directors.
AGF Private Capital’s strategic vision is to continue building a best-in-class private markets business offering diverse, innovative solutions that meet the unique needs of financial advisors and their investors, family offices, and institutions. And the growth of the firm’s private markets business will further expand AGF’s investment capabilities and increase management and performance fee revenues – all of which are expected to contribute to earnings growth.
Adding Kensington and its expertise in private equity adds to AGF Private Capital’s existing private credit strategy and alternative capabilities, expanding its growth channels. AGF Private Capital’s fee-earning assets are expected to grow to $4.6 billion after the closing of the transaction.
As part of the AGF family, Kensington will benefit from the size and scale of AGF’s $42.8 billion AUM business, its broad distribution reach, and access to its product development expertise and operating infrastructure. And Kensington has looked at expanding into the U.S. and overseas markets. AGF’s established relationships and distribution reach into those regions make AGF the ideal partner to support the acceleration of Kensington’s growth initiatives.
The deal is expected to be accretive to future adjusted EPS, with the closing to occur in fiscal Q2 2024, subject to the receipt of certain regulatory approvals and closing conditions. And under the terms of the definitive agreements:
1.) AGF will make a strategic investment of $45 million and acquire a 51% ownership interest in Kensington.
2.) Kensington employees will maintain a 49% ownership interest in the firm, with ownership broadly held by Kensington’s three Senior Managing Directors.
3.) If certain near-term growth targets are achieved, Kensington will receive an additional earn-out payment.
4.) Under the leadership of the Senior Managing Directors, Kensington will maintain its investment decision-making independence and will continue to operate as a distinct operating entity under the Kensington brand.
Ash Lawrence, Head of AGF Private Capital, Judy Golding, AGF’s President and Head of Global Distribution, and Ken Tsang, AGF’s Chief Financial Officer, will join Kensington’s three Senior Managing Directors on Kensington’s Board of Directors, with Ash Lawrence becoming Chairman.
Stikeman Elliot LLP acted as legal counsel and National Bank Financial acted as financial advisor to AGF. Goodmans LLP acted as legal counsel to Kensington.
KEY QUOTES:
“We are very excited to partner with Kensington as we further build out our diversified private markets business. Kensington is a well-positioned private equity investment firm with an established brand and proven track record of performance. They have strong relationships that fit well within AGF’s target channels and have built a growth-oriented business that mirrors AGF’s goal of accelerating the growth of our private markets business.”
— Ash Lawrence, Head of AGF Private Capital
“AGF Private Capital’s strategy is the ideal catalyst for Kensington’s further growth as we look to open doors to new strategies, relationships and regions. AGF’s size, scale, reputation and capital to invest in our growth lends the credibility and backing we need as we look to expand our investments, including the launch of additional innovative investment products.”
— Tom Kennedy, Chairman and Senior Managing Director, Kensington
