A $5.6-billion-AUM (as of October 31), 21-year-old, Midwestern asset manager is teaming up to enter the ETF space, and they're also investing in their new, nearby ally.
| Michael Norman "Mike" Loukas|
TrueMark Investments, LLC
, CEO and chief investment officer of RiverNorth Capital Management
], and Mike Loukas
, principal and CEO of TrueMark Investments
, confirm that earlier this month Chicago-based RiverNorth bought
a minority stake in Rosemont, Illinois-based TrueMark. They'll also be launching some RiverNorth-powered active ETFs under TrueMark's TrueShares brand.
Galley and Loukas confirm that neither side worked with a consultant or investment bank on the deal. Pricing and terms have not been publicly disclosed, yet Loukas confirms that the deal does not include an option for RiverNorth to completely take over TrueMark down the line. (RiverNorth is now TrueMark's largest outside investor.)
"Management [of TrueMark] still controls the firm ... Management has no intention of giving up control. RiverNorth doesn't want control," Loukas tells MFWire
, adding that, while incentives could increase RiverNorth's stake, that wouldn't involve a change in control. "We're going to run our business as we always have."
"We were looking to enter the ETF space and were introduced to them," Galley tells MFWire
. "Making the investment in TrueMark aligns the interests of both firms. We want to be focused on the product innovation and product creation."
Loukas notes that the TrueMark and RiverNorth teams "share similar business priorities."
"We always intended to take on a strategic partner. It just had to be the right one," Loukas says. "We've been very opportunistic in the discussions ... This is a very particular and special transaction for us. It's not something we do lightly nor have we done this in the past."
Since TrueMark launched last year, the firm has rolled out 15 ETFs. RiverNorth will be TrueMark's 15th subadvisor ally. Looking ahead, watch for Truemark to team up with more subadvisors, "in asset classes that provide an opportunity for active management," Loukas says.
As for RiverNorth, the firm offers closed-end funds, private funds, and SMAs, as well as traditional, open-end mutual funds.
"Since 2015, we have launched seven listed closed-end funds," Galley says. "As far as open-ended registered funds, the ETF wrapper is where we see a lot of interest."
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