Toronto-based Sprott Inc. (TSX: SII) has agreed in principle to acquire Flatiron Capital Management Partners, an alternative investment manager specializing in market-neutral strategies.
Toronto-based Flatiron has approximately $275 million in assets under management.
The deal announced Wednesday is subject to satisfactory results of due diligence investigations of Flatiron and the negotiation of definitive agreements, among other things. The two companies expect the transaction to close by the middle of the third quarter of 2012. Financial details were not disclosed.
“We are committed to broadening our investment capabilities by hiring best-in-class investment managers and this transaction brings us one of Canada’s leading convertible bond arbitrage teams,” said Peter Grosskopf, CEO of Sprott, in a release.
“We believe the Flatiron team and strategies are uniquely qualified to perform well during the volatile markets which we expect will persist for some time. Flatiron will provide an ideal complement to our growing suite of specialty fixed-income funds, which upon completion of this transaction, will represent more than $800 million in AUM.”
Since inception in January 2000, Flatiron Market Neutral LP and its predecessor managed account, the “Flatiron Fund”, managed by Flatiron co-founders Steve Duenkler and Parm Kalirai, have generated average annual returns of 9.54% net of fees and expenses, as of April 30, compared to 5.4% for the S&P/TSX Composite Index over the same period.
organization. Sprott is an industry leader with an investment philosophy and outlook that aligns closely with ours,” said Duenkler.
“We look forward to working with the team at Sprott to develop new products and introduce our approach to new investors,” added Kalirai.
The investment strategy of the Flatiron team is designed to provide stable and absolute returns, as well as low volatility through all phases of the economic cycle.