The shower door company T. Rowe Price became a major hedge fund participant with the $4.2 billion Oak Hill acquisition and a $500 million co-investment, and RIA was listed as a major potential custom
The veteran Baltimore company quickly increased its capital under management by $53 billion and charged a fee of 1.5%, before cutting its earnings.
Brooke's note: T. Rowe Price is the same as Roland Park, Gilman School and Hunt Cup in Baltimore high society, but it has always been a humble and steady person. Leg Mason and Alex. Brown is the other two major financial brands in Baltimore, but each brand has the DNA of facilitating transactions and seeking excitement, which makes them ultimately the tidbits of other people's stories. Now, T. Rowe is on the offensive, as a form of defense, let it continue as a Baltimore-based company, as a patient and charming place to absorb and radiate the city’s culture—the charm of New York and nearby Washington, D.C. Damn it. Offensive passing involves buying a company that is not leaking in New York's financial culture. The opposite force is that it was done by Rob Sharps' local Maryland son, which may well mark a great chapter for this company that has been around since 1937.
The soon-to-be CEO T. Rowe Price Group, Inc. took an apologetic tone and helped take the lead in the $4.2 billion acquisition of Oak Hill Advisors, LP, which manages $53 billion in assets.
The deal was reached before Rob Sharps took over from Bill Stromberg, who had a 35-year T. Rowe veteran and became T. Rowe's CEO in 2016, on January 1, 2022. Sharps is currently the President, Head of Investment and Group Chief Investment Officer of T. Rowe.
"Our vision is to become the world's premier active investment manager," Sharps said in an interview with Bloomberg on Thursday. "Alternative assets is a fast-growing asset class."
"From the perspective of the future related to RIA, as stated in the press release, T. Rowe Price and OHA plan to be T. Rowe Price's wealth and retail channels (including broker-dealers, banks, RIA and platform businesses," T. Rowe spokesperson Brian Lewbart said in response to an e-mail inquiry.
"The initial focus will be on leveraging complementary distribution opportunities between T. Rowe Price and OHA institutional clients to give full play to the best strengths of both organizations."
Glenn August, founder and CEO of OHA, stated that T. Rowe Price will better position the two companies to "meet the changing investment needs of customers, as well as the financing needs of companies and financial sponsors."
Stromberg is a graduate of Johns Hopkins University. In his press release, he almost apologized and explained why a company that is almost pioneer-like, self-directed, highly transparent, and has an organic growth culture is making a Wall Street wolf-like company at the door. See also: Vanguard Group’s private equity retail drive became real as it launched a buyer-conscious product to its brokerage account this summer as a prelude to choosing “suitability” through its RIA
"Although we are committed to a long-term strategy of achieving organic business growth, we have also taken a deliberate approach and considered adding new capabilities through acquisitions to advance our business strategy," he said.
OHA meets the high standards we set for inorganic opportunities, and their proven private credit expertise will help us meet our customers' needs for alternative credit. "
Sharps also felt it necessary to explain to the Wall Street Journal that T. Rowe did not change the personality of Jekyll and Hyde when he bought Oak Hill.
He said in an interview: "This is not a signal that we have begun to implement the'Pearl chain' strategy and begin to relentlessly acquire other companies."
For Sharps, who was first hired by T. Rowe in 1997, this move was more in his cab, pushing the company to shift to institutional thinking starting in 2001.
"I found an opportunity for the company: to manage large investment portfolios for institutions," he told Towson University Alumni Magazine in 1993.
"T. Rowe provided $2 million in seed funding to launch the fund, which was launched on Halloween in 2001. Nearly nine years later, the portfolio has provided approximately $18 billion in funding to more than 60 U.S. and international clients."
Wall Street hedge funds have the shadow of Michael Milken, Michael Bury and neighborhood loan sharks, which are absolutely out of date for this veteran Baltimore mutual fund company.
According to its ADV2, it charges a high investment management fee of 1.5% before the performance fee. The SEC filing stated that more than 25% of its revenue comes from the latter style of hedge fund fees.
In fact, Oak Hill received a performance sweetener in its deal with T. Rowe. After achieving certain business milestones in 2025, it will receive an additional $900 million in cash.
Currently, this transaction includes the $3.3 billion paid at the close of trading, of which approximately 74% is cash and 26% is T. Rowe Price common stock.
Oak Mountain has made considerable profits due to its expertise in distressed debt, where it became the lender of last resort to unlucky companies and the collateral of traditional banks.
The return on loans for this type of investment is often between 8% and 9%, although an article on Private Debt Investor stated that the distressed debt industry itself faces a significant reduction in desperate borrowers. Some pressure.
The magazine pointed out that this is a high-level loan shark business that has flourished after the 2008-2009 financial crisis.
According to its ADV2, it is also an important participant in junk bonds, and like hedge funds, it uses leverage to amplify its returns.
Stromberg played a defensive role as an active manager of mutual funds, in which T. Rowe shined and provided the foundation for ETFs.
Sharps' improvement marked a shift in strategy to offense and a substantial tilt toward active management.
Most of the $500 million pledged as a co-investment in Oak Mountain will be used to turn the company into a "platform" for alternative investments.
iCapital recently raised US$440 million-also valued at approximately US$4 billion-to make it more effective as an alternative platform. See: After signing a large deal to become an alternative engine for Envestnet and Allfunds, iCapital raised a heartbreaking $440 million at a valuation of $4 billion. "
Oak Hill is motivated to strike a deal with T. Rowe, which has a very retail atmosphere, because it faces headwinds in its Wall Street power niche market. It competes with super giants such as Blackstone, Carlyle and Apol, all of which covet the troubled debt niche of Oak Hill.
According to a statement quoted by Bloomberg, Oak Mountain has raised $19.4 billion since January 2020. According to a Bloomberg article, Carlyle said on Thursday that it had raised $22 billion in the third quarter ended September 30 alone, while KKR raised $590 in just three months ended June 30. One hundred million U.S. dollars.
T. Rowe also hopes to strengthen his collection of sluggish assets. Bloomberg said the company reported a net outflow of US$6.4 billion in the third quarter, resulting in insufficient earnings and revenue for the quarter.
However, Wall Street liked the acquisition of T. Rowe and offered to raise its stock price to $215.29 today, an increase of 11.54%, to close at $215.29. Just a little bit from the record high, the company's market value is close to 49 billion U.S. dollars.