AMG Buys Stake in EIG Global Energy as Sonneborn Joins Firm

Mar 28, 2014 12:47 pm ET

(Updates with shares in second paragraph, analyst’s comment in fourth paragraph.)

March 28 (Bloomberg) -- Affiliated Managers Group Inc. said it is acquiring a minority stake in EIG Global Energy Partners LLC, the asset manager spun off from TCW Group Inc., and William C. Sonneborn was appointed as EIG’s president.

The management of EIG, which specializes in energy and energy-infrastructure investments, will retain a majority equity position, Beverly, Massachusetts-based AMG said today in a statement. AMG also said today it will acquire a stake in value- oriented investor River Road Asset Management. AMG shares rose as much as 5.3 percent, the most in more than two years.

Sonneborn, formerly the head of KKR & Co.’s public-markets business and before that at an executive at TCW, will take his post at EIG on May 5. AMG owns a collection of boutique money managers specializing in stocks, hedge funds and private equity. The firm is benefiting from an investor shift into equities and alternative-investment products.

“These two transactions should add approximately 50 cents to annual earnings as well as be additive to the company’s already strong organic growth profile,” Daniel Fannon, a Jefferies & Co. analyst based in San Francisco, wrote today in a note to clients.

AMG bought River Road from Aviva Plc, acquiring all of the insurer’s equity stake in the money manager.

AMG rose 4.7 percent to $190.45 at 12:46 p.m. in New York, the most since Dec. 20, 2011.

Estimated Price

While terms of the deals weren’t disclosed, Fannon said he believed AMG paid $275 million to $300 million for the stake in EIG and $150 million to $160 million for River Road.

EIG, based in Washington and led by Chief Executive Officer Blair Thomas, spun off from Los Angeles-based TCW in January 2011. It will add $15.9 billion in assets, as of Dec. 31, to the $537 billion already managed by AMG’s affiliates. River Road managed about $11 billion.

“We believe the firm is uniquely placed to capitalize on the increasing investment opportunities in the energy sector and generate strong organic growth,” AMG CEO Sean Healey said in the statement.