NEW YORK — Norton Reamer, founder and former chief executive officer of United Asset Management Corp., Boston, has launched Asset Management Finance Corp., which will offer new avenues of financing for investment management firms.
Backed by National Bank Financial Inc., Montreal, the new firm will provide structured financing to investment firms that need money, Mr. Reamer said in an interview. He is chief executive officer and president of New York-based AMF.
"What's different is that we will be revenue-sharing, not acquiring. We will do financings of money management firms that allow them to retain their independence. No one else has done that before," Mr. Reamer said.
The financing could translate to a variety of strategies. The financing could be used for a spinoff, to get liquidity or to transfer ownership to the next generation, and that could be done in stages. AMF will work only with established companies, not startups, he said.
In return for the money it advances to an investment manager, AMF will receive a percentage of gross top line revenue. The range will be from 10% to 25%, but could be more or less depending on the specific agreements, Mr. Reamer said. "These will be expiring interests, which could run seven to 10 years or longer, again depending on the contract."
AMF is a sister company of Putnam Lovell, another subsidiary of National Bank Financial. Most of AMF's seven employees (not including Mr. Reamer) come from Putnam Lovell's client finance group, including Rob Jakacki, who will be senior vice president in charge of structured finance and underwriting, and Barry Klayman, who will be a senior vice president in charge of operations. Putnam Lovell will close its client finance unit to new clients.
Investment management consultant Bruce Bockelman, managing director at Bockelman Parkhill Group, Naperville, Ill., said AMF could be a successful model if it helps firms to grow.
"It's always best for investment firms to leave the ownership with the employees, because it gives them incentives. But one of the problems with the UAM model was that a number of its affiliates wanted equity, but didn't do anything to grow their businesses once they got it. This new model sounds like another way of allowing people to cash out of their business while retaining ownership, but it doesn't solve the problem of how they're going to grow," Mr. Bockelman said.
Gregg Buckalew, senior, vice president at Clark Consulting Partners, Atlanta, was a little more cautious. "The distribution channels for money manager products have narrowed, making it riskier than ever to operate as an independent money manager," Mr. Buckalew said. "As a consultant, I hope the new company succeeds because we need to retain all the independent firms we can get.
"I think the trends of the business work against it, though, because the trend has been toward consolidation.
"However, given that Norton Reamer is president and CEO, there's probably no one else who would know better than he how to structure this kind of program. You couldn't find anyone else who knows more than he does about what to do and what not to do, having learned from his successes and his failures."