Janus Capital Group has acquired a majority interest in Kapstream Capital Pty, a global unconstrained fixed income asset manager with $6.6bn in assets under management for $85m initial cash consideration. 

Janus Capital has the option to purchase the remaining 49% interest in the firm.

“This transaction underscores three key commitments at Janus,” said Dick Weil, CEO of Janus Capital. “First, we want to be the place where great investors come to invest. Kapstream’s Kumar Palghat, Steve Goldman and Nick Maroutsos are simply great people and great investors. 

"Second, we passionately believe that given volatility in global rates, investors need excellent fixed income choices that offer less exposure to interest rate risk. 

"Third, the acquisition of Kapstream furthers our commitment to expand our fixed income capabilities as part of the firm’s intelligent diversification strategy."

The acquisition brings Janus Global Macro Fixed Income's total assets under management to $8.7bn as of March 31 2015. 

Fixed income specialists Kumar Palghat and Nick Maroutsos founded Kapstream in 2006. Kapstream manages global unconstrained fixed income. Gross, Weil and Palghat worked together at Pacific Investment Management Company for 10 years.

Bill Gross will remain the primary portfolio manager of the Janus global unconstrained bond strategy, with Palghat supporting him as co-portfolio manager. 

“I look forward to working with my old colleague, Kumar Palghat and the rest of the Kapstream team as we deliver value for our clients,” said Gross.

“While our US expansion plans began in 2013 with Kapstream’s Newport Beach, CA, office opening, the opportunity to work with Bill again and create a truly global team, was not one we could pass up," Palghat said. 

"Our combination brings a number of advantages, primarily giving our existing clients the benefit of additional input from Bill, one of the most highly regarded fixed income portfolio us to deliver more value to our client portfolios."

The global macro fixed income team will remain a separate, autonomous and distinct capability to the fundamental fixed income team. Janus says the platforms offer highly complementary strategies.

Palghat will remain portfolio manager of the Kapstream absolute return income fund and Goldman will assume a greater leadership role in managing Kapstream’s strategies. The strategies for both will not change.

Kapstream’s unconstrained bond business in Australia will continue in essentially its current form.