Global private equity firm Warburg Pincus has acquired a majority stake in Source, a European provider of exchange-traded products (ETPs).
Lee Kranefuss, executive-in-residence at Warburg Pincus and incoming executive chairman of Source.
Source’s existing shareholders, who include BofA Merrill Lynch, Goldman Sachs, JP Morgan, Morgan Stanley and Nomura, will continue as minority shareholders.
The deal will inject new money into the London-headquartered firm to help it enhance its product offering, develop its distribution capabilities and expand through acquisitions.
Source is one of the largest ETP providers in Europe, with more than $15 billion in assets under management. Since its launch in April 2009, its products, which comprise a mix of in-house and third-party sub-advised ETPs, have traded over $510 billion. Its third-party partners include Hong Kong-based CSOP, fixed income titan Pimco, hedge fund specialist Man GLG and UK passive giant LGIM.
As part of the deal, Lee Kranefuss, currently an executive-in-residence at Warburg Pincus, will join Source as executive chairman where he will work closely with the current management team led by CEO Ted Hood. Kranefuss was formerly global CEO of iShares, which was then part of Barclays Global Investors (now part of BlackRock). In this role he oversaw the global expansion of iShares from launch in 2000 to managing over $600bn in assets in 2010.
Ted Hood, CEO of Source, commented: “I am delighted to welcome Warburg Pincus as a shareholder and Lee Kranefuss as our new executive chairman. I am proud of everything that Source has achieved since it was founded only a few years ago and look forward to building on our success with the support of Lee and Warburg Pincus. This investment will provide us with additional capital to further enhance the value that we offer investors.”
Lee Kranefuss, incoming executive chairman of Source, said: “The ETF industry is at an inflection point and Source offers a unique value proposition to investors through its combination of products providing both innovative funds and market exposure. I think that there is a tremendous opportunity for explosive growth over the next couple of years and believe that Source is well placed to become a top tier ETF provider, not only in Europe but also globally.”
Cary Davis, managing director at Warburg Pincus, added: “Source has quickly established itself as a leading European provider of exchange-traded products and we are impressed with its track record and performance. We look forward to partnering with the current shareholders, Lee, Ted and the rest of the management team with a view to significantly accelerating the company’s growth plans.”
The transaction is subject to regulatory approval.