Make way for the enablers.
If boutique asset managers were ever looking to expand their businesses — or if individual investment teams and portfolio managers ever wanted more independence — there is a new breed of firms focused on supporting entrepreneurial bids in the money management industry.
Firms such as Frontier Partners LLC, Chicago; Proctor Investment Managers LLC, New York; MD Sass Macquarie Financial Services LP, New York; and most recently Northern Lights Ventures LLC, Tacoma, Wash.; each is taking aim at the smaller end of the asset management spectrum, an area that officials for these firms say is lush with opportunities.
While a number of private equity firms have focused on investing in mid- and large-size money managers, there has been less emphasis on supporting smaller firms and talented investment teams, said Paul Greenwood, partner at Northern Lights. He recently launched the firm along with Andy Turner, former managing director and head of investment management and research at Russell Investment Group, and Tim Carver, former managing director at private equity firm Orca Bay Partners, Seattle.
Mr. Greenwood said Northern Lights has based its new business on "empowering," or lifting out investment teams that want to operate independent of larger financial services firms. "Money management is a business based on intellectual capital," he said. "And it's remarkable how easily, and often, that intellectual capital can be alienated by bureaucracy."
In addition to helping teams start their own firms, Northern Lights supports recapitalizations in which teams buy themselves out from their parent company.
The firm has several transactions that Mr. Greenwood expects to complete in the first quarter of 2007.