Asset management firm BlackRock said it agreed to acquire the fund of funds business of Quellos for up to $1.7 billion, in a move to expand its alternative investment operations.
BlackRock said it will combine its hedge and private equity fund of funds activities, following the acquisition.
The combined business is expected to have more than $25.4 billion in assets under management.
Quellos Group will receive $562 million in cash and $188 million in BlackRock common stock upon closure of the deal, expected around October 1, the company said in a statement.
In addition, Quellos may receive up to an additional $970 million in cash and stock over three and a half years based on certain measures.
BlackRock, however, said it will not acquire those businesses of Quellos that are involved in civil lawsuits in connection with tax strategies and will not take any related potential liabilities.
The combined fund of funds operations will be branded as BlackRock Alternative Advisors, with Quellos Chief Investment Officer Bryan White serving as global head, the company said.
Jeffrey Greenstein, chief executive officer of Quellos, will retire once the deal goes through, it added.