Federated Hermes acquires FCP Fund Manager, L.P.

Federated Hermes has completed the acquisition of an 80% interest in FCP Fund Manager, L.P., a U.S. multifamily real estate investment firm, for up to $331 million. The transaction expands Federated Hermes' foothold in the American real estate sector, a strategic move bolstering its private markets and alternatives investment platform.

The acquisition includes a payment structure comprised of $215.8 million in cash, $23.2 million in Federated Hermes Class B common stock, and potential additional contingent consideration of up to $92 million. Post-acquisition, FCP has been restructured as a Delaware limited liability company and now operates under the name Federated Hermes FCP Manager, LLC. FCP’s extensive presence in the U.S. market is underscored by its management of $3.5 billion in client assets and a rich portfolio that includes investments or financing for over $14.8 billion in asset value.

Strategically, this acquisition significantly enhances Federated Hermes’ capacity in the multifamily real estate domain in the U.S., complementing its existing operations in the UK. Federated Hermes, with $19.1 billion under management in its alternatives platform, anticipates leveraging FCP's established expertise and market presence to offer diversified investment solutions. FCP has historically excelled in investing and managing multifamily real estate, with operations extending across six U.S. offices targeting 19 priority markets.

The transaction affords FCP the institutional backing necessary to accelerate its growth and broaden its investment reach within the multifamily sector. Federated Hermes’ President and CEO, J. Christopher Donahue, highlighted the timing of the move into the U.S. real estate market, citing strong demand fundamentals. The merger aligns with Federated Hermes' commitment to expanding its high-quality alternatives business and capitalizing on enduring opportunities within the real estate sector.

Looking ahead, the restructuring of FCP into Federated Hermes FCP Manager, LLC and its integration into Federated Hermes’ alternatives platform will be critical. The partnership is expected to enhance capabilities and offer broader investment avenues for clients. As these two entities align operationally, further developments could involve the expansion of both their client base and asset management capabilities, leveraging the synergies brought forth by the transaction.