Neil Hennessy just made another deal, this time to merge in three funds, and he is still looking for more acquisitions.

Neil Hennessy Hennessy Advisors chairman, CEO & president

On May 10, Hennessy Advisors, the publicly traded, $6 billion investment manager located in Novato, California, signed an agreement with Manning & Napier Group and Rainier Investment Management, to acquire the assets of the Rainier U.S. Equity Funds, and merge them into existing Hennessy funds. Collectively, the three Rainier funds have $565 million in AUM.

Hennessy has agreed to pay 0.85 percent of the funds' combined AUM, an SEC filing reveals, based on the trends' AUM on the day before the deal eventually closes. At the funds' current AUM level of $565 million, the price would be $4.8025 million.

"We are always looking for acquisitions, so this is no real surprise," Neil Hennessy, chairman, CEO and president of Hennessy tells MFWire.

This acquisition is expected to be completed by Q3 of this year.

The assets of the Rainier Mid Cap Equity Fund and the Rainier Small/Mid Cap Equity Fund will merge into the Hennessy Cornerstone Mid Cap 30 Fund, and the assets of the Rainier Large Cap Fund will merge into the Hennessy Cornerstone Large Growth Fund.

Looking ahead, Hennessy puts asset manager M&A in the context of fee pressures on active managers and the rise of the passive, "it would be hard for actively managed companies to grow organically unless they make acquisitions, or are being acquired," said Hennessy.

Michael Emery, senior portfolio manager of Rainier commented, “Neil Hennessy and the team at Hennessy Advisors consistently demonstrate a commitment to the mutual fund business and to their shareholders. All of us at Rainier are confident that our shareholders will receive both solid portfolio management and excellent service.”

Manning & Napier, a publicly traded, $29 billion Fairport, New York-based firm, bought a 75 percent stake in Rainier, a Seattle-based fund firm, in 2016. Today, Rainier is still an affiliate of Manning.

Spokesperson for Manning & Napier and Rainier did not immediately respond to requests for further comment.

Check back for updates as the story develops. 

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