Texas hedge fund manager buys Northwater businesses

Date: Monday, October 5, 2009
Author: Investment Executive

Crestline Investors, Inc., a Fort Worth, Tex.-based alternative investment manager, has acquired certain assets from Toronto's Northwater Capital Management, Inc. and will open a Canadian office to serve that business, the companies said Thursday.

Crestline acquires certain assets related to Northwater's hedge fund of funds and beta overlay investment management businesses. The acquisition increases Crestline's total assets under management to approximately US$5.8 billion, including US$683 million of Northwater HFoF assets and US$1.5 billion of Northwater client beta overlay investment management business. Financial details of the transaction were not disclosed.

As part of the transaction, Crestline will establish an affiliate office in Toronto to serve existing and acquired Canadian client accounts and build additional relationships within the Canadian investment community. Paul Robson, former president of Northwater, will become president of Crestline Canada, Inc.

“This transaction marks a solid step forward in our strategy to increase the scale of our investment management business, diversify our client base and expand our presence in new markets,” says Douglas Bratton, president and chief investment officer of Crestline.

“It also significantly strengthens our investment capabilities and allows us to offer enhanced hedging strategies and options for more effective asset allocation and overall management of institutional hedge fund programs. The tenured Northwater team brings a long-term track record to Crestline and we look forward to working with them to build our platform in Canada,” Bratton adds.

“The transfer of these assets to Crestline was in the best interest of our clients and is a strategic step that will allow us to better focus our resources on our Intellectual Property fund business and other growth initiatives we have identified,” says David Patterson, chief executive officer of Northwater.

“Crestline and Northwater share similar investment strategies, philosophies and cultures. Crestline has an excellent reputation among institutional investors and consultants and an outstanding track record in hedge fund of funds investing. I am confident that the clients transferring to Crestline will continue to be well-served,” Patterson concludes.

Northwater is in the process of winding up Northwater Market-Neutral Trust (TSX: NMN.UN).