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(Bloomberg) — Russell Investments is being acquired by a group of investors led by the venture firm B Capital Group and California Public Employees’ Retirement System in a bid to ready the 90-year-old asset manager for the AI era.
The consortium was organized by B Capital, which was co-founded by billionaire Eduardo Saverin and former Bain Capital investor Raj Ganguly. The deal for the $416 billion asset manager is valued at $2.8 billion, according to a person with the knowledge of the matter, who asked not to be named discussing non-public information.
“We’ve always believed that the way that people save and invest for retirement can be improved by leveraging AI,” Ganguly said in an interview, declining to comment on the transaction’s details. “But you can’t remove the human element from it.”
The acquisition comes at a moment of considerable change in the asset management industry, with firms rushing to combine for scale, expanding into new types of private and alternative assets and investing in technology to reach more clients.
In the last two years, Russell Investments has taken in more client money, growing organically by more than 15%, according to the firm. The deal for the Seattle-based company comes roughly a decade after TA Associates Management and Reverence Capital Partners took the asset manager private for $1.15 billion. Back then, it managed roughly $270 billion.
The transaction is subject to regulatory approval and is expected to close early next year.
Ganguly said that B Capital had considered investing in the asset management industry for a while after finding that investors are “systematically underserved” in their retirement and personal investing needs. He said B Capital decided against simply backing an upstart or robo-advisory business that didn’t have a longstanding staff and trusted relationships with clients.
The acquisition is “a compelling opportunity to build a next-generation asset manager,” Calpers’ Deputy Chief Investment Officer Anton Orlich said in a statement.
Russell Investments, which like many money managers oversees stock and bond funds, has also long focused on advising clients on how to set up broader portfolios of assets and manage taxes. It runs one of the industry largest businesses for “outsourced chief investment officer” mandates. This service offers larger investors a money manager’s advice on how to oversee their portfolios overall.
