© 2019 SourceMedia. All rights reserved.

Fidelity, T. Rowe funds acquire stakes in StepStone

Fidelity Investment funds snapped up about 8% of advisory firm StepStone in the deal, according to a person with knowledge of the matter.
Fidelity Investment funds snapped up about 8% of advisory firm StepStone in the deal, according to a person with knowledge of the matter.

Funds managed by Fidelity Investments and T. Rowe Price are backing investment advisory firm StepStone ahead of a potential initial public offering as soon as 2020, according to people with knowledge of the matter.

Fidelity and T. Rowe vehicles and a U.S. family office collectively bought a 14.4% stake in the company, with the Fidelity funds snapping up about 8%, said one of the people, who asked not to be identified because the matter is private. StepStone raised $115 million from 12 investors, according to an Aug. 28 filing.

StepStone spokesman Owen Blicksilver and Fidelity spokesman Charlie Keller declined to comment. A representative from T. Rowe didn’t immediately respond to a request for comment.

Bloomberg reported in August that funds managed by Fidelity were in talks to buy a minority stake in StepStone, which oversees more than $260 billion in asset allocations on behalf of clients including pension funds and sovereign wealth funds, and has more than $52 billion in assets under management, according to its website.

At 84 basis points, the average expense ratio is over 40 basis points pricier than what investors paid on average last year.
September 18

Many asset managers have bolstered their roster of institutional investors before an IPO. In 2003, Hamilton Lane — a rival to StepStone — sold an ownership position to Cascade Investment, the personal investment arm of Bill Gates. Hamilton Lane repurchased that stake in 2015 and went public two years later. Its stock has more than tripled from its $16 debut.

StepStone, which is based in New York, specializes in private markets. It tailors portfolios for clients and often combines fund commitments with co-investments, in which pensions and sovereign wealth funds directly invest in deals alongside the funds they back, enabling them to reduce overall fees. — Additional reporting by Annie Massa