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FS Investments Acquires Portfolio Advisors to Form a $73 Billion Alts Firm

FS Investments, a sponsor of alternative investment products, and Portfolio Advisors, a middle-market private asset specialist, announced they have entered into a definitive agreement to combine their firms.

Upon closing, Portfolio Advisors will become a wholly owned subsidiary of FS Investments and will serve as the institutional investment arm of the company. According to a spokesperson for FS Investments, both firms will continue to do business under their current names.

FS Investments and Portfolio Advisors executives says the companies will have representation on senior leadership committees across both organizations. Michael Forman will remain as chairman and chief executive officer of FS Investments, Elizabeth Campbell will join the management committee of Portfolio Advisors and Brian Murphy will transition from his current role as managing member of Portfolio Advisors to become a senior advisor to the combined firm.

FS says the company will be poised for growth with over $73 billion in assets under management, including a large capital base and distribution platform. Together, FS Investments and Portfolio Advisors says they will meet increasing investor demand for alternatives with a diversified suite of alternative investment solutions for both institutional and individual investors.

“I am thrilled to join forces with Portfolio Advisors and applaud our team, led by our co-presidents, Enrico Gaglioti and Mike Kelly, for identifying an ideal strategic partner,” said Michael Forman, chairman and chief executive officer of FS Investments. “This transaction is transformative for FS Investments, accelerating our efforts to broaden our institutional client base, diversify our offerings to include growth-oriented products such as private equity, and deepen our in-house investment capabilities. This combination also enhances our financial profile, diversifies our revenue streams and positions us to invest in further growth.”

“This partnership provides significant new resources that will help support our global institutional clients,” said Brian Murphy, co-founder of Portfolio Advisors. “At the same time, FS Investments’ deep product development expertise and robust distribution platform will bring our leading private markets investment strategies to a broader audience. This combination presents a unique opportunity to expand our reach, launch new strategies and drive growth while providing continuity for our first-rate investment teams and institutional clients.”

Strategic Rationale:

  • The combined firm will have a various investment capabilities across alternative asset classes and strategies, including private equity, private and liquid credit, private real estate and liquid alternatives.
  • The combined firm will serve institutional and wealth management clients across the globe, bringing together Portfolio Advisors’ institutional client network and international distribution capabilities across North America, Europe and Asia with FS Investments’ wealth management distribution reach across the wirehouse, RIA and independent broker-dealer channels.
  • FS Investments will expand Portfolio Advisors’ access to wealth management channels, encouraging near-term opportunities for Portfolio Advisor’s MVP Private Markets Fund and feeder funds for other Portfolio Advisors strategies.
  • FS Investments and Portfolio Advisors expect to grow existing lines of business while “exploring new opportunities to deliver on the shared vision of providing both institutional and wealth management clients a full suite of alternative investments.”
  • The combined firm will have over $73 billion in assets under management and will be “well positioned for growth with a robust financial profile, including a large permanent capital base, strong margins and diverse revenue streams.”

Transaction Details

  • Portfolio Advisors will become the institutional investment arm of FS Investments and will continue to operate with its full complement of employees and its offices in Darien, Dallas, London, Zurich, Hong Kong and Singapore.
  • FS Investments’ and Portfolio Advisors’ executives will have representation on senior leadership committees across both organizations.
  • The transaction is expected to close in the first half of 2023, subject to applicable regulatory approvals and other customary closing conditions.

Founded in 1994, Portfolio Advisors offers a variety of investment solutions across private equity, private credit and private real estate. Most recently, Portfolio Advisors launched its MVP Private Markets Fund, a registered private equity fund with more than $500 million in assets, which is structured for both wealth management and institutional clients.

FS Investments was founded in 2007 and manages a suite of alternative strategies including private credit, real estate credit, opportunistic credit, structured credit, liquid credit and liquid alternatives across a variety of fund structures including business development companies, non-traded REITs and interval, closed-end and mutual funds.

For more FS Investments news, please visit their directory page.