A 33-year-old, publicly traded mutual fund firm is poised to enter the ETF business via its 11th acquisition
. The pending deal
will boost the $3.2-billion-AUM (as of June 30) acquirer's fund count to 17 in total.
| Teresa Mariani "Terry" Nilsen|
Hennessy Advisors, Inc. / Hennessy Funds
President, Chief Operating Officer, Director / Executive Vice President, Treasurer
On Monday, Neil Hennessy
, chairman and CEO of Hennessy Advisors, Inc.
], and Bill Davis
, founder and managing director of Stance Capital, LLC
that Novato, California-based Hennessy Advisors has agreed
to adopt the Stance Equity ESG Large Cap Core ETF
(STNC). The actively managed, ESG ETF currently has about $40 million in AUM, is advised
by Red Gate Advisers, LLC
(a subadvised fund firm), is subadvised by Stance, and is a series of the RBB Fund
, co-founder and CEO of Red Gate and chief compliance officer of RBB, declined to comment.
Pricing and terms of the deal have not been publicly disclosed. The deal is expected to close next quarter (i.e. Q4 2022), pending SEC approval of Hennessy Advisors' exemptive relief order, plus approval of the shareholders of the ETF, the board of the Hennessy Funds Trust
, and the board of RBB.
"Throughout RBB's long-tenured history, reorganizations occur when Fund and/or Advisor transitions include large stand-alone Trusts. RBB and the Board have been supportive throughout," a spokesperson for RBB tells MFWire
via an emailed statement.
Once the deal closes, the ETF will be transformed into the new Hennessy Stance ESG Large Cap ETF
, becoming a series of the Hennessy Funds Trust (alongside the existing Hennessy mutual funds) and with Hennessy Advisors taking over as the investment advisor. Stance will remain subadvisor of the fund, with Davis and Kyle Balkissoon
, the current PMs, staying on. Vident Investment Advisory, LLC
will stay on as trading subadvisor, U.S. Bank
will stay on as back-office provider, and the fund will continue to operate under Blue Tractor Group's Shielded Alpha
active ETF wrapper, confirms Terry Nilsen
, president and chief operating officer of Hennessy Advisors. (U.S. Bank currently serves as the fund's administrator, custodian, and transfer agent.)
"We're bringing over all the partners," Nilsen tells MFWire
. "The mechanics and the portfolio management will remain the same, which is really important for the investors."
"We are excited to undertake this strategic expansion of our business and to partner with the team at Stance Capital," Neil Hennessy states. "This unique ETF product is consistent with our historical strength of providing our investors with portfolios focused on long-term value, while kicking off the next stage of our product evolution into the ETF market."
"There are just so many great people in this ETF business," Nilsen says. "This is a way for us to walk in with some assets and some great partners."
Nilsen lauds the Stance team for offering "a very well-constructed portfolio" backed by "strong fundamental investing."
"Bill and Kyle have a lot of conviction," Nilsen says. "It's a really nice partnership."
Davis, for his part, describes partnering with Hennessy as a way to help get Stance "to the next level."
"We were interested in finding the right fit and we did undertake a process," Davis tells MFWire
, noting that the process began in early 2022 and went into the spring. "During that process we met with a number of potential advisors or sponsors for the fund."
About half a dozen firms sent in proposals for possible deals, Davis says. He points to distribution opportunities as a key factor in evaluating those opportunities.
"Hennessy's an organization that's got a lot of funds in the market, they've got a very strong reputation, selling agreements on over 200 platforms, and they have a desire to get into the ETF space," Davis says. "We provide that outlet for them. They also I think have an interest in the ESG space, and we bring them that as well."
"Working with Hennessy will hopefully be a springboard to growth in assets, growth in relationships, working with more platforms," Davis adds, "but our job remains the same."
Nilsen confirms that the parties did not bring in investment banks or consultants to help with the deal. The deal involved "good old fashioned handshake networking, in-person," Nilsen confirms.
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