An affiliate of private equity firm Warburg Pincus is to acquire a majority stake in European exchange-traded product (ETP) provider Source.
The existing shareholders, including five of the world’s largest investment banks, BofA Merrill Lynch, Goldman Sachs, JP Morgan, Morgan Stanley and Nomura, will continue as minority shareholders.
Lee Kranefuss (pictured), currently an executive-in-residence at Warburg Pincus, will join Source as executive chairman where he will work closely with the current management team led by CEO Ted Hood in order to develop the business further. Kranefuss was the architect and global chief executive officer of iShares, formerly part of Barclays Global Investors, which he built into the largest global ETF platform. Kranefuss oversaw the global expansion of iShares from launch in 2000 to managing over USD600bn in assets in 2010.
Source offers equity, fixed income, commodity and alternative market exposure through exchange-traded funds and exchange-traded commodities. Source offers a number of products from select partners, including one from its recent partnership with CSOP Asset Management, a Hong Kong subsidiary of China Southern, one of the largest and oldest asset managers in mainland China. Source’s open architecture approach has enabled it to forge partnerships with global financial leaders such as CSOP, PIMCO, MAN GLG and LGIM. Since its launch in April 2009, Source has collected over USD15bn in total assets and its products have traded over USD510bn.
This transaction will provide Source with additional resources enabling it to further develop and launch new products, enhance existing products, expand client relationships and deliver investor solutions.
Hood says: “I am delighted to welcome Warburg Pincus as a shareholder and Lee Kranefuss as our new executive chairman. I am proud of everything that Source has achieved since it was founded only a few years ago and look forward to building on our success with the support of Lee and Warburg Pincus. This investment will provide us with additional capital to further enhance the value that we offer investors.”
Kranefuss says: “I am excited to become part of the Source team and to work with the experienced management group in order to further accelerate the expansion and development of the business. The ETF industry is at an inflection point and Source offers a unique value proposition to investors through its combination of products providing both innovative funds and market exposure. I think that there is a tremendous opportunity for explosive growth over the next couple of years and believe that Source is well placed to become a top tier ETF provider, not only in Europe but also globally.”
The transaction is subject to regulatory approval.
