Patrick Galley and his team have brought in a new backer from Gotham, but they're not giving up control of their 24-year-old, $5.2-billion-AUM (as of September 30), Sunshine State fund firm.

Rob Jakacki Kudu Investment Management LLC CEO

On Wednesday (December 4), Galley, CEO and chief investment officer of RiverNorth Capital Management, LLC [profile], and Rob Jakacki, CEO of Kudu Investment Management, LLC, revealed that Kudu has invested in RiverNorth. The two teams also clarified that New York City-based Kudu specifically took "a passive, minority" stake in West Palm Beach, Florida-based RiverNorth "to support the firm's growth," and they clarified that RiverNorth remains majority-owned (and controlled) by its own employees, with Galley still at the helm.

(Per RiverNorth's most recent form ADV, filed on July 5, prior to the deal RiverNorth was principally owned, indirectly, by Galley and founder Brian Schmucker. At the time, Galley owned between 50 and 74 percent of a holding company parent, while Schmucker owned between 25 and 49 percent.)

Colchester Partners LLC and Regions Securities advised RiverNorth on the deal, while Seward & Kissel LLP provided legal counsel to both RiverNorth and Kudu. The Kudu and RiverNorth teams have not publicly revealed the terms of the deal. Yet the Kudu team typically provides what they call "permanent capital" to support independent asset managers (as well as firms in wealth management). This is Kudu's 27th "permanent capital" deal, and as of the end of 2023 the firm had deployed more than $928 million in capital across its boutiques. (That translates into about $36 million in capital per boutique.)

RiverNorth is a big closed-end fund provider, with its eight CEFs accounting for half of the firm's AUM. Yet the boutique's team also offers three open-end mutual funds, two ETFs, and four private funds (i.e. hedge funds, as well as SMAs. Their specialty is "opportunistic strategies." RiverNorth has also backed at least one ETF boutique, near RiverNorth's old hometown of Chicago.

Galley lauds Kudu as "a strategic partner that understands [RiverNorth's] boutique investment culture."

"Kudu has the capital, expertise, and global network to support our growth both organically and inorganically as we expand our closed-end fund platform and continue to generate superior long-term performance for our clients," Galley states.

"Our goal is to support the RiverNorth team as they execute their strategic growth plans," Jakacki states, praising RiverNorth for having "a prominent franchise as a manager in niche capital markets segments and as a leading sponsor of closed-end funds." 

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