AIMCo Buys Stake in Alt Credit Specialist

The Canadian sovereign fund has taken a minority ownership stake in DFG Investment Advisers, one of its asset managers.

The Alberta Investment Management Corporation (AIMCo) has bought a minority stake in one of its asset managers in an effort to align interests.

“DFG’s commitment to their clients aligns with AIMCo’s values and approach to investing.”The C$85 billion ($58.3 billion) fund is collaborating with DFG Investment Advisers after working together for six years, initially on AIMCO’s fixed income strategy.

“DFG is a trusted manager that has provided AIMCo with strong performance and comprehensive analytical support,” said Dale MacMaster, AIMCo’s CIO, in a statement. “DFG’s commitment to their clients aligns with AIMCo’s values and approach to investing.”

Since establishing the relationship in 2009, AIMCo further invested in DFG’s strategies across public markets, particularly in alternative credit, according to the release.

The Canadian fund’s public equities chief Peter Pontikes added that DFG’s “unique expertise” in structured credit “positions them well to capitalize on opportunities that have arisen due to recent regulatory changes.”

In October, Towers Watson argued that institutional investors have much to gain from alternative credit, despite current allocation being “a drop in the enormous roughly $40 trillion global credit markets’ ocean.”

Alternative credit could help investors reduce their dependence on equity risk premium without wholly sacrificing returns, the consulting firm said.

DFG has some $2 billion under management primarily in corporate and structured assets as of November 30, 2015.

AIMCo has made a number of similar M&A deals over the past year.

Most recently in November 2015, the fund acquired an 8% stake in an Alberta-based clean power generation company for $200 million, adding to its $4.3 billion infrastructure portfolio.

In June, AIMCo joined forces with fellow Canadian fund the Ontario Municipal Employees Retirement System to acquire a London-based environmental consulting firm. They agreed to pay $1.7 billion.

“We consider our investment in [the consulting firm] to be an important portfolio addition for our clients, and further evidence of the private equity group’s ability to execute on its strategy of direct investing,” AIMCo’s Head of Private Equity Peter Teti said at the time of the announcement.

Private equity groups KKR and Blackstone bought stakes in hedge fund firms last year in an effort to tap into revenue streams, rather than gaining direct exposure to potentially riskier strategies.

Related: OMERS, AIMCo Buy Consultant in Club Deal; Rob Jakacki on Why Assets Owners Are Key to Asset Management M&A; The Case for Alternative Credit

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