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Tuesday, April 24, 2018|
Where One $20B Asset Manager Sees Strategic Opps
When it comes to strategic opportunities, the team at one private-equity-backed Midwestern asset manager is open to M&A, alliances, and internal product development. For their due diligence on potential allies or targets, one factor rises above the rest.
"First and foremost, culture is very important to Tortoise" when it comes to acquisitions, says Michelle Kelly, senior managing director and chief strategy officer at the Leawood, Kansas-based asset manager. "We're a very entrepreneurial-minded firm. We are very focused on being creative, being innovative as we're thinking about providing solutions."
In January, a coalition of investors led by PE firm Lovell Minnick closed on a deal to buy about two-thirds of Tortoise Investments, and management at Tortoise upped their combined stake to about one-third. When the deal was unveiled last fall, Lovell Minnick partner Bob Belke confirmed that the PE shop planned to "invest and probably invest aggressively into the company," hinting that "continued acquisition activity" might be on the table and that launching more products definitely would be.
Kelly's team focuses on Tortoises' strategic investments, which includes both launching new products and acquiring other shops or teams. Tortoise currently works with about $20 billion in assets across a variety of different product structures, including mutual funds and ETFs.
"We can be very nimble," Kelly tells MFWire. "We are very open in terms of the approach that we take in terms of growth. It really can come in many different shapes and sizes."
Often times, that means Tortoise developing a new product internally. Yet it can also mean partnering up with an outside team or firm, or even acquiring one via a lift out or acquisition.
16-year-old Tortoise, which started out specializing in energy infrastructure master limited partnerships (MLPs), now focuses broadly on "making an impact through essential asset and income investing," Kelly says. They recently launched a direct lending social infrastructure interval fund, and they now offer funds specializing in water and renewable energy. A couple of years ago they even bought an LA-based fixed income team. Tortoise's strategies, Kelly says, "tend to fill a void in the market, where there's a need for capital."
"We see a lot of opportunities on the horizon," Kelly says. "We really want to do things in a quality way, when it makes sense to do them."
"We can take a very long-term approach and be very thoughtful in what we do," Kelly adds. "We can be a very fast-moving Tortoise, but we want to be that in a thoughtful way."
For potential M&A targets or allies, Tortoise offers support in areas like distribution, marketing, and product development.
"We bring a lot to the table," Kelly says. "We have a very well-established and experienced team ... Tortoise is a pretty unique firm."
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