Resolute Investment Managers will exercise its option to take majority control of ARK Investment Management, a move not supported by ARK's leader.
Resolute, which takes stakes in money managers, acquired a minority stake in ARK in 2016 alongside an agreement that it would serve as the exclusive U.S. distributor of ARK's investment strategies, which focus on technologically enabled, disruptive companies.
In an Oct. 29 SEC filing, ARK reported that as part of the 2016 agreement, Resolute has "an option to purchase a controlling voting and equity interest in (ARK) that is exercisable in 2021," and said Resolute notified the firm on the same date that it "intends to exercise that option."
Casey Sheets, a spokeswoman for Resolute, declined to comment on the company's decision to increase ownership of ARK to a majority stake.
Neither firm provided the size of the existing and future ownership stakes or the financial terms of the deal in response to Pensions & Investments' requests.
According to ARK's most recent SEC ADV filing, Catherine D. Wood, the firm's CEO and CIO, holds an ownership stake in the firm she founded in 2014 of 50% to 75%.
In a statement, Ms. Wood expressed the firm's negative view of Resolute's action: "On behalf of the employee-owners of ARK, we are disappointed that Resolute Investment Managers and its private equity owner, Kelso & Co., have chosen to issue this unwelcome notice that they intend to seize control of our business.
"As reported by Morningstar, ARK has delivered top one-percentile returns for multiple products over one-, three- and five-year periods. Thanks to our research and investing success, paired with our innovative digital marketing strategies, ARK now ranks among the largest ETF issuers in the U.S.
"The remarkable success of our team is rooted firmly in a culture of transparency, collaboration, and employee ownership. We do not believe that equity ownership by a party tangential to our business is in the best interest of ARK's stakeholders."
Separately, ARK issued an RFP seeking "to explore the potential replacement of Resolute Investment Distributors, an affiliate of ARK's minority partner, as a distributor of its U.S. retail and institutional products and Services."
The RFP said Resolute Investment Distributors would be included in the process.
ARK's assets under management with and without discretion totaled $29.8 billion as of Sept. 30, up 210.4% from the same date a year earlier.
Assets managed by the seven firms Resolute has ownership stakes and their subadvisers totaled $86.7 billion as of Dec. 31.
