Headline: Russell ETFs seek approval ahead of $2.8bn ownership change
Russell Investments’ exchange-traded funds are seeking shareholder approval for new advisory agreements following the proposed $2.8 billion acquisition of the asset manager by a consortium led by B Capital and including CalPERS. The transaction highlights the governance and regulatory consequences of ownership changes for fund managers and ETF investors.
Russell Investments’ exchange-traded funds will hold a special shareholder meeting in November to approve new investment advisory agreements following the proposed acquisition of the asset manager by an investor consortium led by B Capital and including the California Public Employees’ Retirement System.
The preliminary proxy statement filed with the US Securities and Exchange Commission sets November 24 as the date for the special meeting. Shareholders of eight Russell ETFs will be asked to approve new agreements with Russell Investment Management, the funds’ existing adviser, following the change in ultimate control triggered by the proposed transaction.
The filing provides new detail on the financial structure of the deal. Russell Investments is being acquired by BEAM Topco in an all-cash transaction valued at approximately $2.8 billion, subject to adjustments. The acquisition is being financed through a combination of debt and equity, with the buyer’s equity commitments totalling up to $2.2 billion.
The consortium includes B Capital, its principals and CalPERS, with CalPERS expected to hold a majority non-voting interest in the acquisition vehicle. The transaction is expected to close in the first quarter of 2027, subject to regulatory and other conditions.
For ETF investors, the transaction illustrates an important consequence of asset-management consolidation. A change in control of Russell Investment Management automatically terminates the existing advisory agreements under the Investment Company Act, meaning shareholder approval is required if the adviser is to continue managing the funds.
The proposed post-transaction agreements are otherwise substantially unchanged, and the filing states that advisory fee rates will not increase as a result of the new agreements. The board has unanimously recommended that shareholders approve the proposals.
The shareholder vote also includes a proposal allowing Russell Investment Management greater flexibility to enter into or amend certain affiliated subadvisory arrangements without further shareholder approval, as well as a proposed change to the concentration restriction applying to the Russell Investments Global Infrastructure ETF.
The process will therefore be closely watched by asset managers and ETF investors beyond Russell itself, as ownership changes increasingly intersect with fund governance, advisory agreements and regulatory requirements.