BlueCove Limited, the London-based scientific fixed income manager, and Ares Management Corporation, a leading global alternative investment manager, have reached an agreement under which Ares will acquire a minority equity stake in BlueCove with the option to acquire control of the business over a multi-year term. Terms of the transaction were not disclosed.
BlueCove has been purpose-built to play a leading role in the development of scientific fixed income asset management as a mainstream investment style. Scientific investing provides investors with both a complement and an alternative to the traditional, active discretionary investment process that has dominated active fixed income management for decades. Potential advantages for investors include an increased probability of repeatable outcomes, a technology-enabled increase in investment breadth, increased investment process transparency, excess returns that tend to exhibit a low correlation with those of discretionary managers, and a medium-term opportunity to harvest natural alpha from an underrepresented investment methodology.
Alex Khein, CEO and Co-founder at BlueCove, said: “We are delighted to announce this strategic partnership with Ares, a market-leading alternative management firm. We believe that over the last decade, the supply of data, increased market breadth, globalisation of fixed income markets, and significant research development mean that optimal conditions for scientific investing in liquid fixed income are now in place. Our partnership with Ares highlights a shared strategic view and joint desire for BlueCove to solidify its market leadership in this exciting sector.”
Hugh Willis, Executive Chairman and Co-founder at BlueCove, added: “We have great respect for Ares as a business and our two firms share a similar entrepreneurial culture. We believe that this transaction has the potential to significantly accelerate our mission of bringing scientific fixed income investing to a global client base in the years to come.”
Kipp deVeer, Partner and Head of the Credit Group at Ares, said: “We are excited to partner with BlueCove, a recognized leader in the field of scientifically managed fixed income. We believe in the compelling secular growth prospects for the sector, and together with the BlueCove team, we will be at the forefront as the opportunity continues to evolve.”
Boris Okuliar, Partner and Co-Head of Liquid Credit at Ares, added: “BlueCove immediately stood out as an ideal partner in this sector given its specialized team across investment, research, and engineering capabilities and institutional infrastructure. We look forward to working closely with the team and anticipate that there will be future opportunities to leverage their knowledge and experience employing advanced technology-driven data and analytics.”
The transaction is expected to close in the second or third quarter of 2023 and is subject to customary closing conditions, including regulatory approvals. Upon closing of the transaction, Mr. Okuliar will join as a member of BlueCove’s Board of Directors.