AGF Private Capital Inc., the private markets arm of AGF Management Limited (AGF), has made a significant strategic investment in Kensington Capital Partners Limited, a premier Canadian alternative investment firm. This partnership, announced in January 2024, marks a pivotal moment for both firms, setting the stage for accelerated growth and expanded reach in the private equity landscape. For Kensington Capital Partners, this investment injects substantial resources and strategic support to amplify its already impressive trajectory in the alternative investment sector.
Strategic Investment for Growth and Expansion
The acquisition of a majority interest in Kensington Capital Partners by AGF Private Capital is a calculated move to bolster AGF’s presence in the burgeoning private markets. Kensington, bringing to the table a robust $2.6 billion in assets under management (AUM) and a nearly three-decade-long history of successful private equity investing, perfectly aligns with AGF’s strategic objectives. This investment is not merely about expansion; it’s about strategically enhancing AGF’s capabilities and market position by integrating a proven leader like Kensington Capital Partners into its portfolio. Post-transaction, AGF Private Capital’s fee-earning assets are projected to reach $4.6 billion, demonstrating the immediate impact of this strategic alliance.
Kensington Capital Partners: A Leader in Canadian Private Equity
Established in 1996, Kensington Capital Partners has solidified its reputation as a leading Canadian alternative asset manager. Operating from offices in Toronto, Calgary, and Vancouver, the firm boasts a 40-member team with a consistent record of strong performance in managing private equity investments. Kensington’s expertise spans across mid-market buyout and growth strategies, as well as venture capital, offering investors diversified access to private markets through a hybrid investment approach. This includes Fund of Funds, co-investments, and direct investing, catering to a wide spectrum of investor needs and risk appetites. Notably, Kensington has been at the forefront of innovation in the Canadian market, pioneering the launch of Canada’s first open-ended private equity fund over a decade ago – the Kensington Private Equity Fund.
Maintaining Independence and Culture
A key aspect of this partnership is the commitment to maintaining Kensington Capital Partners’ operational and investment independence. While becoming part of the AGF family, Kensington will retain its distinct identity and entrepreneurial spirit, which has been instrumental to its success. The leadership team at Kensington, including Senior Managing Directors Tom Kennedy, Richard Nathan, and Eamonn McConnell, will continue to steer the firm’s direction. This continuity in leadership, combined with strategic guidance from Ash Lawrence, Head of AGF Private Capital, and the Kensington Board of Directors, ensures a seamless transition and a focus on sustained growth. AGF’s approach is designed to fuel Kensington’s expansion without disrupting the core values and successful investment culture that defines the firm.
Synergies and Future Opportunities
The collaboration between AGF and Kensington Capital Partners unlocks significant synergies and future opportunities. Kensington will benefit immensely from AGF’s extensive resources, including its substantial $42.8 billion AUM business, broad distribution network, and expertise in product development and operational infrastructure. For Kensington Capital Partners, which has ambitions to expand into the U.S. and international markets, AGF’s established global presence and distribution reach provide a crucial springboard. This partnership not only accelerates Kensington’s growth trajectory but also enhances its credibility and market appeal, paving the way for the launch of innovative investment products and the exploration of new strategic avenues.
Transaction Details
The strategic investment entails AGF acquiring a 51% ownership interest in Kensington Capital Partners with a $45 million investment. Kensington employees will retain a significant 49% ownership, primarily held by the Senior Managing Directors, ensuring continued alignment of interests and entrepreneurial drive. The agreement also includes a potential earn-out payment for Kensington if specific near-term growth targets are met, further incentivizing performance and expansion. The governance structure will see Ash Lawrence, Judy Golding (AGF’s President and Head of Global Distribution), and Ken Tsang (AGF’s Chief Financial Officer) joining Kensington’s Board of Directors, with Ash Lawrence assuming the role of Chairman. This blend of leadership from both firms aims to provide strategic oversight while preserving Kensington’s operational autonomy. The transaction is anticipated to be accretive to AGF’s future adjusted EPS and is expected to close in fiscal Q2 2024, pending regulatory approvals and standard closing conditions.
In conclusion, the strategic investment by AGF Private Capital in Kensington Capital Partners represents a powerful alliance poised to reshape the Canadian private equity landscape. By combining Kensington’s proven expertise and innovative approach with AGF’s scale and resources, this partnership is set to propel Kensington Capital Partners into a new phase of growth and solidify its position as a leading force in alternative investments, offering enhanced opportunities for investors and stakeholders alike.
