Northill Capital takes majority stake in Riverbridge Partners
By Drew Carter | October 16, 2012 12:01 am
Northill Capital acquired a 58% stake in U.S. growth equity manager Riverbridge Partners.
Terms were not disclosed.
Northill bought out all of the retired or former partners at Riverbridge, and just under half of the stakes held by Riverbridge's existing management team, which will continue to hold the remaining 42%.
Northill's majority ownership will allow Riverbridge to gradually pass ownership to the next generation of management, said Mark Thompson, Riverbridge's founder and chairman.
“Northill is in the unique position to be a long-term, interested investor in our business, without getting involved in the day-to-day management of the business,” Mr. Thompson said in an interview.
Northill will essentially provide an annual market-making service to the firm that will it will determine a fair price for ownership shares in Riverbridge and then buy and sell shares at the same price.
Mr. Thompson said neither he nor Riverbridge's management have any plans to leave anytime soon, but sold to Northill as part of a long-term plan for succession.
Jonathan Little, partner at Northill, said the fact that Riverbridge's management team members share a long history; that their long-term, low-turnover and collegial investment approach has produced consistent outperformance; and that they've stayed focused on smidcap and large-cap growth U.S. equity were all factors in Northill's pursuit of the boutique.
It doesn't hurt that Riverbridge, which manages $4 billion, also charges healthy fees of about 100 basis points, Mr. Little admitted.
“They're very good at what they do,” Mr. Little said in an interview. “Clients these days are very fee-conscious, but (Riverbridge) will pay for themselves” in outperformance.
Riverbridge's smidcap growth and concentrated growth strategies ranked sixth and eighth in five-year annualized returns gross of fees in Pensions & Investments' quarterly ranking of midcap growth managers as of June 30. The strategies boasted annualized returns of 7.99% and 7.41%, respectively.
Mr. Thompson added that Northill will bring the “experience, knowledge and relationships” necessary to expand Riverbridge's distribution into Europe.