MutualFundWire.com: A PE Shop Buys Into an American Beacon Subadvisor

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Tuesday, September 3, 2013

A PE Shop Buys Into an American Beacon Subadvisor

It's deal season again.

Scottsdale, Arizona-based private equity fund Estancia Capital Partners has bought a minority, non-controlling interest in Stamford, Conn.-based traditional equity boutique Sustainable Growth Advisers (SGA).

The terms of the deal were not disclosed.

SGA serves as a subadvisor on a number of products, including the Growth Equity Portfolio and the Institutional Growth Equity Portfolio of HC Capital Trust [profile]; the SGA Global Growth Fund of American Beacon [profile] and the Multi-Style Equity Fund for Russell Investments [profile].

Estancia is a limited partnership with over 30 partners. Its principals are Michael Mendez, Takashi Moriuchi, Danny Kang and Dana Alan Kurttila.

According to Estancia's website, the PE shop targets "firms or teams offering “Institutional Quality”, traditional long-only equity investment styles and selective non-equity and alternative investment strategies. The Fund will seek diversification (7 to 10 portfolio companies) across fund holdings by asset class, investment style, capitalization and market segments/channels served including retail, high net worth and institutional."

The principals look for investment opportunities in four areas:

Management Buyout. The management team of a target firm, controlled by another entity or non-management individuals, seeks to become an independent firm, thereby gaining greater control of day-to-day operations;

Growth Opportunity. Target firm seeks to gain or maintain assets under management requiring access to capital and/or proven leadership experience executing strategic growth initiatives such as redefining brand, entering new market segments and/or investment strategy/product extensions;

Parent Divestiture. Larger financial institution seeks to divest a firm or investment team determined to be “non-core” or redundant as a result of balance sheet issues, acquisition or merger activities, or because of regulatory reform;

Generational Transition. Founder or successor management team seeks to facilitate ownership and management succession while minimizing changes to the firm and its independence, requiring capital and/or expertise from a partner.

Here is the press release:

Company Press Release
Estancia Announces Minority Investment in SGA

SCOTTSDALE, Ariz.--Estancia Capital Partners, L.P. (“Estancia”), a leading private equity fund focused exclusively on the asset and wealth management industries, announced that they acquired a minority noncontrolling interest in Stamford, Conn., based Sustainable Growth Advisers, L.P. (“SGA”). SGA is a boutique traditional equity manager focused on providing high value-added active U.S. and Global growth equity mandates for sophisticated clients. Terms of the transaction were not disclosed.

Michael Mendez, Partner at Estancia, commented, “We were attracted to the ‘Institutional Quality’ of SGA’s investment team and process. The firm’s distinct culture and history of delivering top peer group relative performance are exceptional. We will continue to support a shared vision of creating an investment firm focused on fundamental research and exceptional client portfolio management. Estancia looks forward to assisting SGA with the firm’s continued development.”

Robert Rohn, an SGA Co-Founder, stated, “Importantly SGA will continue to operate independently and under the leadership of the existing management team that will continue to own a majority equity stake in the business. We are excited about the strategic partnership with Estancia. Their principals represent significantly different partners than traditional strategic and financial buyers. They are operationally oriented and focused on investing in boutique asset management firms. Their founders are industry veterans with significant experience in guiding firms through multiple phases of growth.”

About Sustainable Growth Advisers

Founded in 2003 by George Fraise, Gordon Marchand and Robert Rohn, Sustainable Growth Advisers is a boutique asset management firm looking to preserve and grow the capital of their clients through disciplined management of equity portfolios. Their mission is to build enduring relationships, based on integrity, excellence and teamwork, that add value for their clients, employees and community. SGA currently manages approximately $5.3 billion of assets on behalf of institutional, intermediary and retirement plan clients. www.sgadvisers.com

About Estancia

Estancia is a private equity firm focused on small to lower middle market investments in Institutional Quality asset management, wealth management and related business services firms. The Principals – Messrs. Mendez, Moriuchi, Kang and Kurttila – have a history of partnering with management and investment teams in providing equity, growth and working capital to facilitate strategic and opportunistic development of portfolio companies including management buy-outs from larger financial firms, private ownership/succession transitions, growth initiatives and investment team lift-outs. Estancia is currently investing its first institutional fund, Estancia Capital Partners, L.P., on behalf of a diversified base of over 30 Limited Partners.

www.EstanciaPartners.com