For Up to $50MM, a Gotham Shop Sells Off a Piece
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Wednesday, August 07, 2019

For Up to $50MM, a Gotham Shop Sells Off a Piece

An Empire State mutual fund firm has agreed to sell off part of the firm for up to $50 million. A publicly traded alternative asset manager in Canada is the buyer.

John Hathaway
Tocqueville Asset Management
Senior Portfolio Manager, General Partner
Today Whitney George, president of Sprott, confirms that the Toronto-based firm has entered a definitive agreement to buy New York City-based Tocqueville Asset Management's [profile] gold strategy asset management business. Sprott has agreed to pay $10 million in cash and $5 million in stock when the deal closes, plus up to $30 million more in cash and stock as an earn-out two years later.

The deal is expected to close in January 2020. Seward & Kissel served as Tocqueville's legal advisor on the deal.

Sprott has $8 billion (CAD$10.6 billion) in AUM, as of March 31. Tocqueville's gold strategy business has about $1.9 billion in AUM, including $1.1 billion in the Tocqueville Gold Fund, Tocqueville's biggest of five mutual funds with $1.641 billion in combined AUM. That $50-million upward bound on the price tag of the deal translates into 2.63 percent of the gold strategy business' AUM.

John Hathaway, senior PM and general partner at Tocqueville, will join Sprott as part of the deal, as will PMs Doug Groh and Ryan McIntyre. The trio will remain New York City, George confirms.

"Sprott will probably establish its own New York office, which we've been intending to do for a number of years," George tells MFWire.

Robert Kleinschmidt, CEO and chief investment officer of Tocqueville, calls the deal "an excellent fit."

"It ensures us continued participation in the gold space, as well as access to the best investment talent and resources in the sector," Kleinschmidt states. "We look forward to partnering with Sprott in this endeavor and to developing closer ties between the two firms in the future."

Sprott specializes in investing in precious metals and mining, and the firm offers physical trusts and two ETFs, and subadvises Canadian mutual funds. They are no stranger to Tocqueville: the two companies teamed up last February on a joint venture to co-manage a new gold equities investment strategy, in private partnership form.

"The addition of these strategies will complement our other resource investment and financing businesses, expand our global footprint and allow us to service clients in all major gold markets," states Peter Grosskopf, CEO of Sprott.

"Socially, it should be a fairly seamless transaction," George says of the acquisition, adding that Hathaway, McIntyre, and Roe are "some of the most experienced, talented, long-tenured investors" in the space.

The acquisition comes as "Tocqueville is going through a bit of a reorg right now to be a pure advisory firm," George adds.

Hathaway, for his part, lauds Sprott as "a globally recognized brand with a dedicated precious metals platform and a long history in the sector."

Looking ahead, George leaves the door open to further U.S. acquisitions. He notes that global asset allocations to commodities are at record lows.

"We think the tide may be turning," George says.

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