Private equity firm Clearlake Capital Group is planning to acquire investment management firm Pathway Capital Management in a deal that is expected to roughly double Clearlake's assets under management (AUM), according to executives.

Sources familiar with the matter revealed that Clearlake will pay nearly $1 billion for the acquisition.

Headquartered in Irvine, California, Pathway specializes in crafting customized investment portfolios for institutional investors and high-net-worth individuals. The firm currently manages approximately $95 billion in assets, though a significant portion of these assets operate under lower-fee structures compared to traditional private equity or credit businesses.

The transaction will expand Clearlake’s AUM to $185 billion, positioning it among the ranks of major private equity firms. By AUM, Clearlake will rank just outside the industry’s top 10.

Additionally, the acquisition will enable Clearlake to expand into new business areas, including secondaries and infrastructure investments, while potentially opening doors to the private wealth market.

With institutional investors slowing their allocations to private equity, firms in the industry are either scaling up or remaining niche-focused to stay competitive. Many mid-sized firms are struggling with fundraising challenges.

Clearlake, based in Santa Monica, California, has opted for the scale-up strategy. Co-founder and Managing Partner José E. Feliciano stated that the firm believes this approach will allow it to serve large sovereign wealth funds—which seek substantial investments across multiple asset classes—while also tapping into the fast-growing private wealth market.

Clearlake primarily invests in technology, industrials, and consumer sectors. Founded in 2006 by Feliciano and fellow co-founder and Managing Partner Behdad Eghbali, the firm has returned over $20 billion to investors since 2021.

Pathway, established in 1991, initially provided advisory services to institutions and wealth managers interested in private equity, credit, and infrastructure investments. Today, the firm also manages dedicated funds, partnering with other asset managers for co-investments and acquiring private equity stakes in the secondary market.

These asset classes are generally considered more suitable for the private wealth market than pure private equity. While Pathway has yet to launch funds specifically targeting retail investors, larger competitors like Hamilton Lane and StepStone Group have seen notable success in this space.

This acquisition marks Clearlake’s third at the management company level. Last year, the firm agreed to acquire European private credit firm MV Credit Partners from Natixis Investment Managers. Earlier this year, Clearlake merged this business with WhiteStar Asset Management—a collateralized loan obligation (CLO) manager acquired in 2020—and rebranded the combined entity as Clearlake Credit.