Private equity firm Warburg Pincus has acquired a majority stake in exchange-traded product (ETP) provider Source.
Following completion of the deal, Bank of America Merrill Lynch, Goldman Sachs, JP Morgan, Morgan Stanley and Nomura remain as minority shareholders.
Since the beginning of the year, in anticipation of the impending Warburg Pincus investment, Source has implemented an accelerated growth plan, increasing headcount by 20 per cent and adding expertise to key areas including investment content, regional coverage, legal and marketing.
In 2014 Source’s assets under management have increased by 20 per cent, twice the rate of growth seen in the European ETP market.
Source has 35 ETPs with more than USD100 million in assets and five with more than USD1 billion in assets. With total AUM in excess of USD18 billion, Source is currently the fifth-largest European ETP provider by assets.
Lee Kranefuss is joining Source as executive chairman and will work alongside CEO Ted Hood and the management team to continue developing the business. Kranefuss remains an executive-in-residence at Warburg Pincus. Preceding this, he was the architect and global CEO of iShares, which under his leadership became the largest provider of exchange-traded funds in the world.
“The European ETP industry is nearing an inflexion point, where there will be opportunities for both consolidation and expansion,” says Kranefuss. “Growth has been strong but from a low base and, similar to the US market, should accelerate as investors become more familiar with the investments. Source’s business model is built on innovation and delivering performance. This combined with a range of world-class partnerships makes Source uniquely placed for the years ahead.”
“This seems a perfect fit for all parties,” says Hood. “Not only for Source and Warburg Pincus but also, and more importantly, for our investors. Our success has been underpinned by our commitment to finding innovative solutions to meet the ever-evolving needs of investors. The conclusion of this deal marks the beginning of a new chapter for Source, but our story remains very much unchanged. What this news brings is an assurance that we will be able to remain at the cutting edge of the industry and continue delivering on this award-winning strategy well into the future.”