Riverbridge Partners sells majority stake to British firm

  • Article by: NEAL ST. ANTHONY , Star Tribune
  • Updated: October 17, 2012 - 3:46 PM

The deal will preserve the independence of the Minneapolis private investment firm.

A British investment concern will announce Tuesday that it is buying a majority stake in Minneapolis-based Riverbridge Partners, a 25-year-old private investment firm that plans to launch a public mutual fund in January.

Mark Thompson, 52, Riverbridge's founder and chairman, said the investment by Northill Capital will allow Riverbridge to keep its identity and independence, let retiring partners cash out some of their equity and allow younger principals to invest in the firm, knowing they will do better if the firm increases in value over their careers.

"Many firms never solve this problem, which is why they are either sold or ... collapse when the founder departs," said Thompson, who also is chief investment officer. "Our partnership with Northill ensures that Riverbridge will remain an employee-owned firm and, importantly, enable us to more easily broaden our equity ownership to the next generation of leaders."

Northhill's unspecified investment in 28-employee Riverbridge represents 58 percent of the firm's equity, buying out the investment of the retiring John Peyton, 66, and several other retired or former partners, and just under 50 percent of the equity of the existing management team led by Thomson.

Jon Little, a partner in Northill Capital who has known Thompson for years, once was vice chairman of huge BNY Mellon Asset Management.

In a telephone interview Monday, Little said Riverbridge is the fifth of about 10 investment boutiques in which Northill is investing to build a diversified portfolio of well-managed, high-quality investment businesses that feature a collegial "no-stars culture and a continuous commitment to the enhancement and development of its team and capabilities."

Riverbridge, with a portfolio of about $4 billion in growth-oriented equity assets, has outperformed the Russell 3000 and S&P 500 indexes, its benchmarks with a low-turnover approach not unlike that of St. Paul's Mairs and Power Growth Fund. The firm, which manages money for affluent families and institutional investors, will roll out a mutual fund version of the "Riverbridge All Cap Growth Portfolio" in January.

Thompson said Little's experience with mutual fund management and third-party distribution will enable Riverbridge to focus on its forte of investment management and client relations and not have to worry about peddling the mutual fund. Thompson, Peyton and several other Riverbridge owners who are selling some of their stake have agreed to reinvest half the sale proceeds into the new mutual fund.

In September, New York Life said it will acquire a one-third interest in Edina-based Cornerstone Capital Management and merge its large-company growth mutual fund into Cornerstone's better-performing Cornerstone Keystone Large Cap Growth Fund.

Thompson said his firm's employees and partners concluded in recent years that they did not want to sell to a large mutual fund complex or private equity company that might change the culture of the firm and limit the internal-ownership opportunity of the next generation of principals.

Neal St. Anthony • 612-673-7144

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