Innocap, HedgeMark combine for $50bn global platform

Innocap Investment Management has agreed to acquire BNY Mellon’s HedgeMark business to create a single alternative investment SMA platform totaling a combined $50 billion.

The sale will be done with a combination of cash and Innocap shares, allowing for BNY Mellon to own a minority equity stake in the platform, offering allocators customized investment solutions.

“We are excited to welcome HedgeMark employees onboard upon closing. This strong combination will create an agile and scalable industry-leading institutional investment platform,” said Francois Rivard, president and CEO at Innocap. “It puts us in an enviable position to transform the industry and welcome the massive shift underway from co-mingled investing towards platform investing driven by institutional allocators’ desire for Innocap and BNY Mellon’s HedgeMark to create the industry’s leading alternative investment platform more control and transparency over their investments.”

Clients will benefit from combined technological and governance capabilities to serve their stakeholders more effectively, Rivard added.

BNY Mellon will join Innocap reinvesting shareholder Caisse de dépôt et placement du Québec, BNP Paribas and the management of both Innocap and HedgeMark as shareholders at closing. The shareholder base will include new institutional investors Fonds de solidarite FTQ and Walter Global Asset Management.

“This additional investment is in step with our objective of helping portfolio companies expand and reach the next stage in their growth. With this transformative acquisition, we are extremely proud to help create the new global leader in its sector,” said Kim Thomassin, executive vice-president and head of investments in Québec and stewardship investing at CDPQ

HedgeMark’s current management is expected to join the Innocap team in senior roles. The combined organizations will boast 300 experienced professionals.

Operating as an independent, focused, agile and scalable business will advance Innocap and HedgeMark’s shared focus of offering institutional allocators a superior approach to structuring, accessing and monitoring their investments, officials said.

HedgeMark’s Josh Kestler will become Innocap’s president. He said that the combined platform includes hedge funds as well as other strategies across the alternatives spectrum. This transaction combines BNY Mellon’s scalable HedgeMark, the industry’s largest hedge fund managed account platform and leading risk services business, with Innocap’s agile global alternative investment business.

“Our current and future clients as well as our employees will be the biggest winners in this transaction as it allows for continued investment in our business and greater product flexibility,” Kestler added.

The transaction is expected to close in the first half of 2022.

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