Updated from 12:07 p.m. EDT
Atlanta-based money manager
agreed over the weekend to acquire WL Ross & Co., the 6-year-old investment firm run by billionaire turnaround expert Wilbur Ross.
Amvescap will pay an initial $100 million for the firm, and could end up paying $375 million for the company, based on annual earn-out provisions. WL Ross will be folded into Amvescap's private-equity operation, Invesco Private Capital, and Ross will run the division after the transaction is completed.
Ross, known primarily for investing in and helping turn around bankrupt companies, started WL Ross in 2000 with about $450 million from investors and saw his profile rise over the next six years as opportunities in the distressed-asset landscape ballooned.
On a conference call Monday, Ross said the birth of "megafunds" was a major factor in the firm's buyout.
"It used to be that a few billion dollars was a large private equity fund. Now it takes $10 billion or $20 billion to get to that level," he said on the call. "The marketing force
at Amvescap will help to provide us with the counterbalance to the megafunds that are starting to spring up all over the place in the private equity community."
Earlier this month, the Blackstone Group closed the world's largest private equity fund with commitments of $15.6 billion. Moreover, Kohlberg Kravis Roberts and Texas Pacific Group have raised funds worth an estimated $14 billion. WL Ross currently manages roughly $3.5 billion in assets for institutional investors in the U.S., Europe and Asia.
Amvescap's best-known fund families are AIM and Invesco. The firm had $413.8 billion in assets under management at June 30.
Amvescap President and Chief Executive Martin Flanagan emphasized that his company has been delivering more alternative investment strategies that require additional international reach, particularly in the areas of real estate, bank loans and private equity funds of funds.
Ross said that this global expansion of Amvescap's business should help his company expand in places like China, "which is of very great interest to us."
The transaction is expected to be immediately accretive to Amvescap's earnings per share, Flanagan said. Amvescap shares recently were up 84 cents, or 4.9%, to $17.99.
WL Ross' entire investment committee has signed long-term agreements to stay on after the deal is completed.