Lovell Minnick Buys a Midwestern Asset Manager
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Wednesday, October 18, 2017

Lovell Minnick Buys a Midwestern Asset Manager

Lovell Minnick is buying a Midwestern asset manager and plans to back the shop's M&A efforts.

Lovell Minnick is leading a coalition of investors that will buy about two-thirds of Tortoise Investments, Tortoise CEO Kevin Birzer confirms. Management at Leawood, Kansas-based Tortoise will up their combined stake in the company to about 33 percent, from about 23 percent. On the flip side, longtime Tortoise parent Mariner Holdings will sell its 65-percent stake in Tortoise as part of the deal, and four of Birzer's fellow Tortoise co-founders will sell their 10 percent stake. Watch for Lovell Minnick to double on Tortoise and back further expansion.

Marty Bicknell, CEO of Mariner, did not immediately return a call for comment.

Tortoise has about $20 billion in assets under advisement and 152 people, and they specialize in what they call "essential assets and essential income investing," notably oil and gas pipelines and other investments with similar charactertistics. Pricing and terms of the deal were not disclosed. BMO Capital Markets advised Mariner on the deal, Evercore advised Lovell Minnick, and Key Strategic Advisors advised Tortoise management. Credit Suisse and UBS are committing to debt financing for the deal.

AlpInvest Partners, HarbourVest Partners, and several of Lovell Minnick's current PE fund limited partners are investing alongside Lovell in the deal, though Lovell is leading the coalition. Tortoise co-founders Zach Hamel, Ken Malvey, and Terry Matlack are retiring from the company and selling their stakes. Another co-founder, Dave Schulte, left the company in 2015 but is also selling his stake now.

The deal, which is expected to close in early 2018, is the culmination of a process that went public in June when Birzer talked to the Wall Street Journal about the possibility of a sale. At the time he told MFWire that Tortoise was looking for a "buyer with deep pockets and lots of capital." Lovell Minnick, a private equity firm with a particular focus on asset management, seems to fit that bill.

"Our vision here is to back the company and the management team for continued growth. We intend to invest and probably invest aggressively into the company," Bob Belke, a partner at Lovell Minnick, tells MFWire. "It may take the form of seeding the existing products, it may take the form of continued acquisition activity, and it will certainly take the form of continuing to launch additional new products."

Belke praises Tortoise's strategic development team as "a very impressive group," which Lovell Minnick would work with on any deals. Birzer notes that both acquisitions and liftouts could be down the line. Working with Lovell Minnick, Birzer says, gives Tortoise a "tremendous advantage" in doing such deals.

"We think there's a lot of areas that are adjacent or really close to what we're doing," Birzer tells MFWire, pointing to solar power and direct lending opportunities as two other investing areas where Tortoise might be looking to grow in the near future.

As their namesake implies, Birzer explains, Tortoise looks for "long-life, relatively low-risk assets with reasonable returns."

Tortoise started back in 2002. Mariner bought its majority stake in Tortoise in 2009, when Tortoise worked with about $1.4 billion in assets.

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