FS Investments and Portfolio Advisors will merge, creating a $73 billion alternative investment company

  • The combined company will have a wide range of alternative investment solutions tailored to both institutional and individual investors
  • Highly complementary investment and distribution opportunities expected to benefit from continued demand for alternatives and fuel growth
  • Transaction Structured to Preserve Portfolio Advisors’ Autonomy, High-Quality Investment Teams and Investor Alignment

PHILADELPHIA and Darien, Conn., February 2, 2023 /PRNewswire/ — FS Investments, a pioneer in the democratization of alternative investments with more than 35 billion dollars in assets under management and Portfolio Advisors, a global mid-market private equity specialist with more than 38 billion dollars in assets under management, today announced that they have entered into a definitive agreement to combine their businesses. The combined company will be poised for growth with over 73 billion dollars in assets under management, including a significant permanent capital base and a robust distribution platform. Together, FS Investments and Portfolio Advisors will respond to growing investor demand for alternatives with a diversified range of alternative investment solutions for both institutional and individual investors.

Michael ForemanChairman and CEO of FS Investments, commented, “I am excited to join forces with Portfolio Advisors and applaud our team, led by our Co-Chairmen, Enrico Galiotti and Mike Kelly, to identify an ideal strategic partner. This transaction is transformative for FS Investments, accelerating our efforts to expand our institutional client base, diversify our offerings to include growth-oriented products such as private equity, and deepen our inward investment capabilities. This combination also improves our financial profile, diversifies our revenue streams and enables us to invest in further growth.”

Brian Murphyco-founder of Portfolio Advisors, added: “This partnership provides significant new resources that will help support our global institutional clients. At the same time, FS Investments’ deep product development experience and robust distribution platform will bring our leading private markets investment strategies to a wider audience. This combination represents a unique opportunity to expand our reach, launch new strategies and drive growth, while providing continuity for our world-class investment teams and institutional clients.”

Founded in 1994 to serve institutional investors, Portfolio Advisors offers a variety of innovative investment solutions in private equity, private credit and private real estate. The firm manages a wide range of strategies, including direct, secondary and primary investments and junior and senior credit. Portfolio Advisors also provides institutional clients with customized discretionary and non-discretionary portfolio management across its core strategies. Most recently, Portfolio Advisors launched its MVP Private Markets Fund, a registered private equity fund with more than 500 million dollars in assets, which is structured for both wealth management and institutional clients.

FS Investments was founded in 2007 with the mission of providing individual investors with access to alternative sources of income and growth historically available only to large institutions and the ultra-wealthy. Today, the firm manages a range of alternative strategies including private credit, real estate credit, opportunistic credit, structured credit, liquid credit and liquid alternatives across a variety of fund structures, including business development companies, non-traded REITs and interval, closed-end and mutual funds. FS Investments distributes funds through a broad wealth management platform, with hundreds of sales agreements in wirehouse, RIA and independent broker-dealer channels. In recent years, the firm has also launched internally managed, institutionally focused credit strategies using CLOs and drawdown structures.

Strategic rationale

  • The combined firm will have a well-diversified set of investment opportunities across alternative asset classes and strategies, including private equity, private and liquid credit, private real estate and liquid alternatives.
  • The combined firm will serve institutional and wealth management clients worldwide, bringing together Portfolio Advisors’ extensive network of institutional clients and international distribution capabilities in North America, Europe and Asia with the broad reach of FS Investments’ wealth management distribution in the telco, RIA and independent broker-dealer channels.
  • FS Investments will expand Portfolio Advisors’ access to wealth management channels, unlocking short-term opportunities for Portfolio Advisor’s MVP Private Markets Fund and feeder funds for other Portfolio Advisors strategies.
  • FS Investments and Portfolio Advisors expect to expand existing business lines while exploring new opportunities to achieve the shared vision of providing both institutional and wealth management clients with a full range of alternative investments.
  • The combined company will prevail 73 billion dollars in assets under management and will be well positioned for growth with a solid financial profile including a large permanent capital base, strong margins and diverse revenue streams.

Transaction details

  • Portfolio Advisors will become the institutional investment arm of FS Investments and will continue to operate with its full staff and offices in Darien, Dallas, London, Zurich, Hong Kong and Singapore.
  • The executives of FS Investments and Portfolio Advisors will have representation on the senior management committees of both organizations.
  • The transaction is expected to close in the first half of 2023, subject to applicable regulatory approvals and other customary closing conditions.

UBS Investment Bank served as lead financial advisor and Cravath, Swaine & Moore LLP served as primary legal advisor to FS Investments on the transaction, with Dechert LLP serving as special regulatory advisor. Goldman Sachs & Co. LLC and Mizuho Americas also served as financial advisors to FS Investments. Moelis & Company LLC served as financial advisor and Simpson Thacher & Bartlett LLP served as legal advisor to Portfolio Advisors on the transaction, with Schulte Roth & Zabel LLP, acting as special regulatory counsel. Terms of the deal were not disclosed.

About FS Investments
FS Investments is a leading asset manager dedicated to helping individuals, financial professionals and institutions design better portfolios. The firm provides access to alternative sources of income and growth and focuses on setting industry standards for investor protection, education and transparency. FS Investments has 350 employees and is headquartered in Philadelphia, Pennsylvania, with offices in New York, New York, Orlando, Florida and Leawood, Kansas.

About Portfolio Advisors
Portfolio Advisors, LLC is a middle market private asset management specialist that builds value for its clients and partners through a variety of private equity, private credit and private real estate investment programs. The firm’s customized approach to private markets investing has resulted in high investor retention and broad recognition in the institutional investment advisory space. Headquarters in Darien, ConnecticutPortfolio Advisors has over 130 employees worldwide, with additional offices in Dallas, London, Zurich, Hong Kong and Singapore.

Contact information

Sarah McAsey
[email protected]

Ryan McDougald / Elizabeth Lake (FGS Global)
[email protected]

Portfolio Advisors Customer Relations
[email protected]

SOURCE FS Investments

Leave a Comment

Your email address will not be published. Required fields are marked *