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Wednesday, May 16, 2018|
For Needles' Fourth Deal, Resolute Backs a New Startup
Gene Needles and his team at Resolute Investment Managers continue their M&A efforts, this time by backing a new startup boutique that specializes in value equity investing. And watch for Resolute to invest in other boutiques.
Needles, chairman and CEO of Resolute (and of its biggest boutique, manager-of-managers American Beacon [profile]), confirms that Irving, Texas-based Resolute invested in the launch of Dallas-based Morley Campbell's new shop, Continuous Capital. Private-equity-backed Resolute took a majority stake in Continuous, though Needles declined to comment on the pricing and terms of the deal.
Campbell, who most recently served as managing director and PM at Allianz Global Investors' NFJ Investment Group, now serves as president and chief investment officer of Continuous. A spokeswoman for Allianz did not immediately return a call for comment.
Colchester Partners, an investment bank focused on asset manager M&A, advised Resolute on the deal, and Skadden, Arps, Slate, Meagher & Flom provided legal support.
Looking ahead, Needles confirms that he remains on the hunt for more opportunities for strategic expansion. The Resolute family will definitely launch one or more new funds this year and will probably adopt, too, Needles says. Further 2018 M&A is likely, he adds, but not yet set in stone.
"We're experiencing a lot of interest from firms about partnering. Many of those are acquisition opportunities," Needles tells MFWire. "We've had over a dozen conversations so far this year. Some of them are ongoing, some of them are pretty likely, but none of them are done at this point."
Long-term, as Resolute president Jeff Ringdahl told MFWire last month, Needles and his team envision having half of their AUM in equities and half in fixed income and alternatives. Yet in the short-term, they do not try to fill specific asset class niches, though they do favor boutiques and strategies that don't heavily overlap with what the Resolute family already offers.
"We don't ever sit around in a room and say, 'Hey, let's go find a small cap growth manager,'" Needles says. "We have 100 to 200 conversations a year with potential partners ... We wait until we a find a superstar."
"We're looking for really good athletes here," Needles adds. "Ultimately, over time, we'll have a diversified team."
Resolute's expansion process, the way Needles explains it, focuses on three things: "institutional quality, enduring value, and investment excellence."
"We go about accessing those things in three different ways," Needles says. "One is to create subadvised funds [American Beacon's specialty]. Two is to adopt an existing fund. And three is to add capital if need be."
As for launching Continuous, Needles says it "has been so far a great marriage" and calls Campbell "one of the best managers in the business." Resolute already has a lot of value equity offerings by AUM, but those are mostly on the U.S. equity side, while Campbell has invested globally, including in emerging markets. And it helps that Campbell is not too far from Resolute's headquarters, too.
"There was a bit of serendipity here," Needles says. "Morley [Campbell] was already in Dallas."
Continuous is currently sharing office space with Resolute in Irving and may launch its first mutual fund soon.
"We're focused on an emerging market equity portfolio first," Campbell tells MFWire. "We're having conversations currently about other portfolios that may make sense over time."
Campbell says launching Continuous under Resolute "made sense when you look at their lineup of other affiliates," and he says he was "impressed with Resolute's distribution capabilities." As for his startup's name, Campbell says it's about "always growing, always striving to be better."
"I like the word, 'continuous,'" Campbell says. "It's about not quitting."
The Continuous deal is the first time that Resolute has helped launch a startup, Needles confirms. Don't expect Resolute to do a lot of startup launches.
"The bar is incredibly high for that. It would have to be an extraordinary investor, with circumstances similarly well-aligned," Needles says. "It's not our typical M.O., but if I'm honest with you we don't have a typical M.O."
Campbell, an alumnus of both the University of Texas and Harvard Business School, worked as an analyst at Merrill Lynch and then Lazard before joining NFJ in 2007.
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