For Deal #10, Hennessy Heads to Dallas
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Wednesday, July 11, 2018

For Deal #10, Hennessy Heads to Dallas

Neil Hennessy and his team are about to make their tenth acquisition, pushing their mutual fund count to 16. And he says he's "still hunting and looking" for more deals, especially in equities

Hennessy confirms that Novato, California-based Hennessy Advisors [profile] has agreed to take over as the advisor to Dallas, Texas-based BP Capital Funds Advisors' two mutual funds, the BP Capital TwinLine Energy Fund and the BP Capital TwinLine MLP Fund. Hennessy will keep BP Capital Fund Advisors on as the funds' subadvisor, and the PM team will also remain in place.

The pricing and terms of the deal, which was negotiated directly, were not disclosed.

Toby Loftin, founder and managing principal of BP Capital Fund Advisors, confirms that the firm will continue to offer separately managed accounts directly. Meanwhile, a sister company, TriLine Index Solutions, entered the ETF business earlier this year.

T. Boone Pickens started BP Capital in 1997, and in 2013 Loftin launched a new subsidiary, BP Capital Fund Advisors, "to offer products to the broader investment community, starting with mutual funds." Both TwinLine funds also debuted in 2013.

Loftin sees the asset management business as being a three-legged stool, with investment management as one leg, operations and compliance as another, and distribution as the third.

"We were really good at the first part of that," Loftin tells MFWire. "We were not interested in spending the capital to build out a sales and marketing apparatus, and we do fine at compliance and operations but we don't have the scale that a group like Hennessy offers."

In February, the BP Capital Fund Advisors team started looking in earnest for a potential strategic partner for the funds. They already knew the Hennessy team thanks to U.S. Bancorp.

"The comfort level we had with Hennessy was largely predicated on the U.S. Bank relationship and the long history of Hennessy's operations," Loftin says. "They have a proven track record of successful operations but also the ability to grow the funds they've acquired."

Hennessy, for his part, stresses that any deal he does "has to be good for all concerned": the fund shareholders of the acquired funds, the shareholders of the seller, the shareholders of Hennessy, and the shareholders of the Hennessy Funds.

"This really just fit in our wheelhouse," Hennessy tells MFWire, noting that Hennessy already has a natural gas fund and will now have a pure energy equity fund and an energy income fund, too. "Everybody comes out ahead on this."

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