Pinnacle Investment Management has announced it will acquire strategic interest in a US and UK manager for $142 million.
These are a 22.5 per cent stake in US-based private markets firm VSS and a 25 per cent equity stake in UK-based multi-asset manager Pacific Asset Management (PAM). The VSS holding is for US$60.5 million ($92.6 million) and £25.7 million ($49.9 million) for the UK asset.
The firm is also raising $400 million via a fully underwritten placement of Pinnacle shares to institutional and sophisticated investors to fund the two investments, seed new strategies for existing affiliates and support the investment of new growth initiatives.
Pinnacle said the new partnerships will enhance the firm’s diversification into private capital and international markets while also delivering additional scale.
“VSS and PAM highlight Pinnacle’s focus on international acquisitions with substantial growth potential where Pinnacle expects it can add value to accelerate growth. Pinnacle is also continuing to support the growth of current affiliates, including through increased investment in distribution channels domestically and internationally.
“Pinnacle continues to see strong momentum into FY25, with ongoing growth in private markets and other alternative strategies, historical fundraising headwinds in public market equities easing and having delivered meaningful international inflows following an extended build-out of Pinnacle’s international distribution capabilities.”
New affiliates
Founded in 1981, VSS specialises in structured capital investments which provide capital for growth financing, strategic acquisitions and buyouts to lower middle market companies and management teams.
The US$60.5 million is divided between US$50.8 million for Pinnacle’s stake in the asset management business and US$9.7 million for Pinnacle’s share of VSS fund investments. This will be Pinnacle’s second North America-based affiliate as it already holds a stake in Canadian small-cap equity manager Langdon Equity Partners.
Meanwhile, Pacific Asset Management was founded in 2006 and is backed by the Pacific Investments Group as well as being the UK distributor of Pinnacle affiliate Coolabah Capital Investments funds.
Pacific Asset Management is Pinnacle’s third UK affiliate alongside Aikya Investment Management and Life Cycle Investment Partners.
“Along with a proprietary technology platform for multi-asset portfolio solutions, PAM has an extensive distribution footprint across the UK, including in the wealth market which is expected to be highly complementary to Pinnacle’s existing capabilities. It has a successful history of supporting wholly owned and minority-owned investment boutiques and providing third-party distribution services.
“PAM is the UK distributor of Pinnacle Affiliate, Coolabah Capital Investments, and over time, it is expected that there will be significant opportunities to collaborate across distribution, infrastructure, and technology which will benefit both firms and other Pinnacle affiliates.”
Commenting on the deal, Pinnacle managing director Ian Macoun said: “We have made great progress in exporting our unique multi-affiliate model globally. These transactions not only accelerate and enhance our international growth ambitions, but they also provide additional asset class diversification and support further growth of our platform.
“Both VSS Capital and Pacific Asset Management have client-centric cultures, and they have exceptional track records when it comes to growth, performance and meeting their clients’ needs. After engaging with the teams over many months, we have great confidence in each firm’s ability to deliver sustained excellence well into the future.”
