Source assets surge on back of Warburg Pincus deal

Jun 3rd, 2014 | By | Category: ETF and Index News

Warburg Pincus, the US private equity group, has formally completed its acquisition of a majority stake in Source, the London-based exchange-traded fund provider, following approval from the relevant regulatory authorities.

Source assets surge on back of Warburg Pincus deal

Lee Kranefuss, Executive Chairman, Source.

Following completion of the deal, the ETF provider’s founding backers – Bank of America Merrill Lynch, Goldman Sachs, JP Morgan, Morgan Stanley and Nomura – become minority shareholders.

Since the initial announcement of the deal earlier this year, Source has embarked on an accelerated growth plan, increasing headcount by 20%, adding depth and expertise to key areas including investment content, regional coverage, legal and marketing.

This, in part, has helped Source’s assets under management increase by 20% so far this year, twice the rate of growth seen in the overall European ETP market.

Source’s total AUM now surpasses $18 billion, as at 1 June 2014, making it the fifth-largest European ETP provider by assets. Notably, the provider has 35 ETPs with more than $100 million in assets – a key benchmark level – and five with more than $1 billion in assets.

As part of the deal, Lee Kranefuss, a former global CEO of ETF giant iShares, has joined the company as Executive Chairman. He will work alongside Source CEO Ted Hood and the existing management team to continue developing the business. Kranefuss will remain an Executive-in-Residence at Warburg Pincus.

Commenting on the completion, Kranefuss said: “The European ETP industry is nearing an inflexion point, where there will be opportunities for both consolidation and expansion. Growth has been strong but from a low base and, similar to the US market, should accelerate as investors become more familiar with the investments. Source’s business model is built on innovation and delivering performance.  This combined with a range of world-class partnerships makes Source uniquely placed for the years ahead.”

Hood added: “This seems a perfect fit for all parties, not only for Source and Warburg Pincus but also, and more importantly, for our investors. Our success has been underpinned by our commitment to finding innovative solutions to meet the ever-evolving needs of investors. The conclusion of this deal marks the beginning of a new chapter for Source, but our story remains very much unchanged. What this news brings is an assurance that we will be able to remain at the cutting edge of the industry and continue delivering on this award-winning strategy well into the future.”

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