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Monday, August 09, 2021

What Is This Three-Year-Old Multiboutique Hunting?

Reported by Neil Anderson, Managing Editor

Watch for a three-year-old multiboutique to seal another deal or two in the coming months.

Andrew Smith
Spouting Rock Asset Management
Chief Executive
Andrew Smith, chief executive of Spouting Rock Asset Management, LLC [profile], confirms that he has a pair of deals that he's hoping to unveil "in the next six weeks to nine weeks," after buying a minority stake last month in an institutional boutique equity asset manager. Bryn Mawr, Pennsylvania-based Spouting Rock AM now works with $3.7 billion in assets, Smith says.

"We have another couple of deals in the pipeline," Smith tells MFWire. "We'd like to think that within the next six to twelve months we'll be somewhere between $7 billion and $10 billion. That's our hope."

When Spouting Rock AM (the asset management arm of 15-year-old family office, Spouting Rock Financial Partners) invests in boutique asset managers, it buys stakes ranging from 30 percent to 70 percent.

"Our sweet spot is 40 to 60," Smith says. "We never want to own 100 percent. We want true alignment of interests from our managers."

In terms of future deals, Smith says he's interested in specialty fixed income shops in areas like private credit or CLOs. And there are equity niches he's interested, too.

"On the equity side, we're looking for income-generating strategies," Smith says. "We don't have an EAFE product yet. We do luck the quantitative businesses was well."

"We never want two managers on our platform doing the same thing," Smith adds. "We don't want to have competing managers fighting for the same assets. We're responsible for the distribution."

For example, Smith says, he wouldn't want to invest in two small cap growth U.S. equity boutiques, but they could invest in both a small cap growth specialist and a small cap value specialist. 

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