Wells Fargo & Co., the biggest U.S. bank by market value, bought a stake in Rock Creek Group LP to provide more hedge-fund offerings to clients amid a push to double the asset-management unit within seven years.
The lender purchased a 35 percent stake in the Washington- based firm and has an option to make a controlling investment, Wells Fargo asset-management chief Mike Niedermeyer said in an interview. Rock Creek oversees about $7 billion, giving clients access to handpicked hedge funds and emerging markets, the bank said in a statement, which didn't disclose financial terms.
“We view this as one of the fastest-growing segments in the asset-management business,” said Niedermeyer, whose business manages $450 billion for customers at San Francisco- based Wells Fargo. “While it's of a greater interest to larger clients, it's quickly becoming a larger area of focus for middle-size and smaller endowments, and state pension funds.”
Chief Executive Officer John Stumpf, 59, has sought to expand businesses that are less likely to be hampered by new global banking regulations and record-low interest rates. In April, Wells Fargo announced it would buy Merlin Securities LLC, a prime brokerage that caters to hedge funds and other clients with as much as $2 billion in assets.
Rock Creek, in addition to picking hedge-fund managers, also has tools that allow clients to analyze portfolios and stress-test investments, Niedermeyer said. The firm has about 50 employees and is run by Afsaneh Mashayekhi Beschloss, a former World Bank chief investment officer.
Investment Managers
Wells Fargo made the investment through a unit within asset management that groups together boutique investment managers and lets them remain mostly independent, according to the statement. The unit is run by Tom Hoops.
In 2010, Rock Creek received $200 million to invest for the New York state pension fund, the third-largest in the U.S. at the time. The firm lost money for New Jersey's pension system in 2006 with an investment in Amaranth Advisors LLC, a hedge fund that imploded with wrong-way bets on natural gas.
Beschloss, who is married to presidential historian Michael Beschloss, and other Rock Creek employees will continue to own 65 percent of the firm. She left the World Bank in 2001 after managing $65 billion in assets and $160 billion in notional derivatives exposure, according to the statement.
While all of Rock Creek's clients are qualified institutional investors, Wells Fargo eventually may seek to make its strategies available to retail investors, Niedermeyer said.
Asset management caters to institutional clients such as pensions and endowments, sovereign-wealth funds and companies. It also offers mutual funds for retail investors and is separate from the bank's wealth-management unit, which houses Wells Fargo's retail brokerage and manages funds for individuals.
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