A group of investors led by B Capital Group and the California Public Employees’ Retirement System (CalPERS) has agreed to acquire Russell Investments for $2.8 billion, sources familiar with the matter told Bloomberg. The purchase is being framed by the buyers as a step to prepare the 90-year-old asset manager for the artificial intelligence era.
B Capital, the venture firm co-founded by Eduardo Saverin and Raj Ganguly, is partnering with CalPERS on the deal. Russell Investments currently manages $416 billion in assets, according to the reporting.
Strategy and leadership comments
Raj Ganguly, a co-founder of B Capital, said in an interview that the firm has long believed in improving retirement and investment outcomes by leveraging AI. He was quoted as saying, "We’ve always believed that the way that people save and invest for retirement can be improved by leveraging AI," while also stressing limits on automation: "But you can’t remove the human element from it." Ganguly declined to comment on specifics of the transaction.
CalPERS’ Deputy Chief Investment Officer Anton Orlich described the acquisition as, "a compelling opportunity to build a next-generation asset manager," in a statement issued by the pension fund.
Company performance and background
Seattle-based Russell Investments has seen organic growth of more than 15% over the past two years, bringing in additional client capital during that period. The firm runs stock and bond funds and operates one of the industry's largest outsourced chief investment officer (OCIO) businesses.
The transaction follows a prior change of ownership roughly a decade ago, when TA Associates Management and Reverence Capital Partners took Russell private for $1.15 billion at a time when the firm managed about $270 billion in assets.
Rationale and caution
Ganguly said B Capital had been evaluating opportunities in asset management after concluding that investors are "systematically underserved" in retirement and personal investing needs. That conclusion led the firm to prefer acquiring an established manager with a long-tenured staff and trusted client relationships rather than backing a nascent robo-advisor or start-up lacking those attributes.
The transaction remains subject to regulatory approvals and is expected to close early next year, per the report. Further details about financing, governance or operational changes have not been disclosed.