T. Rowe Price acquires Oak Hill Advisors for $7.5bn

Oct 28, 2021 | News

T. Rowe Price is buying alternative credit manager Oak Hill Advisor for a total consideration of $7.5bn, to be paid mostly in cash, as demand for alternative credit strategies among institutional investors gathers pace.

The $1.61trn investment manager will acquire 100% of the equity in Oak Hill Advisor for up to $4.2bn, with an additional $3.3bn payable upon closing.

The transaction will be 74% in cash and 26% in T. Rowe Price stock, with an additional $900m cash paid upon achievement of certain business milestones beginning in 2025.

Outstanding Oak Hill Advisor debt will also be settled once the deal has closed.

Oak Hill Advisor ($53bn) will transition in to T. Rowe Price’s private markets platform. T. Rowe Price said in a press statement that the two firms planned to co-develop new product strategies for T. Rowe Price’s wealth and retail clients.

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The firm has agreed to commit $500 million to co-investment and seed capital.

“While we are committed to our long-term strategy to grow our business organically, we have also taken a deliberate and thoughtful approach to considering adding new capabilities through acquisitions that advance our business strategy,” said Bill Stromberg, chair of T. Rowe Price’s board of directors and chief executive officer.

“OHA meets the high bar we have set for inorganic opportunities, and their proven private credit expertise will help us meet our clients’ demand for alternative credit.”

OHA will operate as a standalone business within T. Rowe Price once the deal has closed. It will also retain autonomy over its investment process and team.

Founder, Glenn August, will continue in his current role and is expected to join T. Rowe Price’s board of directors and management committee. Alongside August, all members of OHA’s partner management team will sign long-term agreements and continue on in the business in their current roles.

August said: “Joining with T. Rowe Price will better position us to meet the evolving investment needs of clients, as well as the financing needs of companies and financial sponsors, while maintaining our record of measured and thoughtful growth.

“T. Rowe Price and OHA share a consistent approach, focusing on investment excellence, integrity, collaborative culture, and client partnership, that will help us build a stronger combined organization. I am grateful for the hard work and commitment of our team members and looking forward to the opportunities ahead,” he added.

Source: Investment Week

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