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Resolute Investment Managers Will Seek a Buyer Again – Barron's

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After selling off several stakes, advisory firm Resolute Investment Managers is going on the block again in 2022.


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After failing to find a buyer this year, Resolute Investment Managers, a multibrand financial advisory firm owned by Kelso & Co and Estancia Capital Management, is expected to go up for sale again in 2022, people familiar with the matter said.




Goldman Sachs Group

(ticker: GS) is advising on the revamped Resolute auction, the people said. Kelso and Estancia will try a second time to find a buyer for Resolute, which manages and distributes mutual funds for retail and institutional investors, as well as defined-contribution plans. Resolute has relationships with more than 30 affiliates including investment managers American Beacon Advisors, Continuous Capital, and Shapiro Capital Management. 




JPMorgan Chase

(




JPM

) advised on the Resolute auction in 2021 that yielded some interest from private equity but didn’t result in a sale, people said on the condition of anonymity. Kelso and Estancia sought more than $1.5 billion for Resolute, Reuters reported in March

“JPMorgan is out and Goldman is in,” one of the sources said. 

Executives for Kelso, Resolute, JPMorgan and Goldman declined to comment while Estancia did not return messages for comment. 

Founded in 1986, Resolute is an asset manager that supplies investment strategies and services to institutions, retirement plans, and retail investors. Kelso and Estancia Capital Management, both private-equity firms, acquired the company, which was then known as American Beacon Advisors, in 2015. Kelso has a majority of Resolute, the company’s website said.

American Beacon changed the name of its parent firm to Resolute Investment Managers in 2017. Resolute then bought stakes in several firms including Ark Investment Management, the asset manager founded by Cathie Wood; direct-indexing firm Green Harvest Asset Management; institutional asset manager SSI Investment Management; financial advisory firm Shapiro Capital; and OpenInvest, a managed-indexing specialist. 

The Resolute process is expected to attract private-equity firms and boutique investment firms such as




Affiliated Managers Group

(AMG). But whether it will find a buyer who will pay $1.5 billion is unclear. Resolute’s affiliated companies had about $90 billion in assets under management as of Sept. 30, down from $120 billion in March.

Resolute streamlined its business in 2021, divesting several stakes. The most notable was the sale of its minority holding in Ark. In late 2020, Resolute attempted a takeover of the ETF firm that is known for betting on




Tesla

(




TSLA

), Barron’s reported. Ark in December of that year hashed out a deal where Wood, who is CEO and chief investment officer, remained majority owner of the firm she founded, while Resolute kept its minority holding. This changed over the summer when Ark acquired the stake held by Resolute, three people familiar with the situation said. It’s unclear how much Ark paid for the stake but Resolute did renew its distribution agreement with Ark. 

“We can confirm that Resolute no longer has an ownership stake in Ark although Resolute continues to distribute products for Ark,” an Ark spokeswoman said in an emailed response to questions.

ARK was the largest of Resolute’s minority-owned affiliates, Moody’s Investors Service said in a Dec. 6 credit opinion. On a consolidated basis, Ark contributed about $21 billion in net long-term flows over the first quarter of 2021, more than the combined net flows of Resolute’s other affiliates, Moody’s said. However, Resolute’s Ark stake “created lots of disruption and volatility” during the sale process earlier this year, one executive said. Kelso will restart the auction next year without the Ark stake, the people said. 

Resolute has also sold its ownership in Green Harvest Asset Management and OpenLink. PGIM Investments, the investment management business of




Prudential Financial

(PRU) completed its acquisition of Green Harvest in December, a notice on the Resolute website said. JPMorgan in August closed its buy of OpenInvest

PGIM did not immediately return requests for comment.

Write to Luisa Beltran at luisa.beltran@dowjones.com

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Pandemic darlings face the boot as investors eye return to normal life

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Stay-at-home market darling Netflix slumped on Friday, joining a broad decline in shares of other pandemic favourites this week as investors priced in expectations for a return to normal life with more countries gradually relaxing COVID restrictions.

The selloff, which began after Netflix and Peloton posted disappointing quarterly earnings, spread to the wider stay-at-home sector as analysts judged the new Omicron coronavirus variant will not deliver the same economic headwinds seen in the first phase of the pandemic in 2020.

“This a confirmation that the economy is gradually moving towards some sort of normalisation,” said Andrea Cicione, head of strategy at TS Lombard.

France will ease work-from-home rules from early February and allow nightclubs to reopen two weeks later, while Britain’s business minister said people should get back to the office to benefit from in-person collaboration.

“With a return to the office and travel lanes opening, darlings of the WFH (work from home) thematic are reflecting the growing reality that the world is moving slowly but with certainty towards a new normalcy,” said Justin Tang, head of Asian research at United First Partners in Singapore.

Netflix tumbled nearly 25% after it forecast new subscriber growth in the first quarter would be less than half of analysts’ predictions.

The stock, a component of the elite FAANG group, was on track for its worst day in nearly nine-and-a-half years following rare rating downgrades from Wall Street analysts.

“It is hard to have confidence that Netflix will return to the historical +26.5 million net subscriber add run rate post the 2022 slowdown,” MoffettNathanson analyst Michael Nathanson said.

“The decay rate on streaming content is incredibly rapid. ‘Squid Game?’ That’s so last quarter. ‘The Witcher?’ Done on New Year’s Eve!”

Exercise bike maker Peloton lost nearly a quarter of its value on Thursday, leading at least nine brokerages to cut their price target on the stock.

The selloff erased nearly $2.5 billion from its market value after its CEO said the company was reviewing the size of its workforce and “resetting” production levels, though it denied the company was temporarily halting production.

Peloton’s shares were up nearly 5% on Friday morning, bouncing back somewhat from a 23.9% drop on Thursday, its biggest one-day percentage decline since Nov. 5.

HOME DELIVERY

Both companies were part of a group, along with others such as Zoom and Docusign whose shares soared in 2020, and in some cases 2021 as well, as people around the world were forced to stay at home in the face of the coronavirus.

However, thanks to vaccine rollouts and the spread of the less severe Omicron strain of COVID-19, life is returning to normal in many countries, leaving companies like Netflix and Peloton struggling to sustain high sales figures.

According to data from S3 Partners, short-sellers doubled their profits by betting against Peloton in 2021, the third best returning U.S. short.

Direxion’s Work from Home ETF has fallen more than 9% in first three weeks of the year, compared to a 6% drop in the fall of the broader U.S. stock market. Blackrock‘s virtual work and life multisector ETF has weakened more than 8% this year.

In Europe, lockdown winners are also going through a rough patch as rising bond yields pressurise growth and tech stocks.

Online British supermarket group Ocado, Germany’s meal-kit delivery firm HelloFresh and food delivery company Delivery Hero which emerged as European stay-at-home champions in the early days of the pandemic have underperformed the pan-European STOXX 600 so far in 2022.

(Reporting by Alun John and Julien Ponthus; Additional reporting by Nivedita Balu, Anisha Sircar and Chuck Mikolajczak; Editing by Saikat Chatterjee, Alison Williams and Saumyadeb Chakrabarty)

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Bitcoin falls 9.3% to $36,955

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Bitcoin dropped 9.28% to $36,955.03 at 22:02 GMT on Friday, losing $3,781.02 from its previous close.

Bitcoin, the world’s biggest and best-known cryptocurrency, is up 2.4% from the year’s low of $36,146.42.

Ether, the coin linked to the ethereum blockchain network, dropped 12.27% to $2,631.35 on Friday, losing $368.18 from its previous close.

 

(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Sriraj Kalluvila)

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Oil, gas investment forecast to rise 22% in Canada – Investment Executive

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It’s positive news for an industry that has now essentially recovered to its pre-pandemic levels, after a disastrous 2020 that saw oil prices collapse due to the impact of Covid-19 on global demand.

But CAPP president Tim McMillan pointed out that in spite of the fact that oil prices are at seven-year highs and companies are recording record cash flows, capital investment remains well below what it was during the industry’s boom years. In 2014, for example, capital investment in the Canadian oilpatch hit an all-time record high of $81 billion, capturing 10% per cent of total global upstream natural gas and oil investment.

“Today we’re at $32 billion, and we’re only capturing about six% of global investment,” McMillan said. “We’ve lost ground to other oil and gas producers, which I think is problematic for a lot of reasons . . . and it leaves billions of dollars of investment that is going somewhere else, and not to Canada.”

Investment in conventional oil and natural gas is forecast at $21.2 billion in 2022, according to CAPP, while growth in oilsands investment is expected to increase 33% to $11.6 billion this year.

Alberta is expected to lead all provinces in overall oil and gas capital spending, with upstream investment expected to increase 24% to $24.5 billion in 2022. Over 80% of the industry’s new capital spending this year will be focused in Alberta, representing an additional $4.8 billion of investment into the province compared with 2021, according to CAPP.

While the 2022 forecast numbers are good news for the Canadian economy, McMillan said, it’s a problem that companies aren’t willing to invest in this country’s industry at the level they once did.

He said investors have been put off by Canada’s record of cancelled pipeline projects, regulatory hurdles and negative government policy signals, and many now see Canada as a “difficult place to invest.”

However, Rory Johnston, managing director and market economist at Toronto-based Price Street Inc., said laying the decline in the industry’s capital spending at the feet of the federal government is overly simplistic.

He added while current “rip-roaring, amazing” cash flows and a period of sustained high oil prices will certainly give some producers the appetite to invest this year, Johnston said, it will likely be on a project-by-project basis and certainly on a smaller scale than the major oilsands expansions of a decade ago.

“You have global macro trends across the entire industry that have begun to favour smaller, fast-cycle investment projects – and most oilsands projects are literally the polar opposite of that,” he said.

One reason capital spending isn’t likely to return to boom time levels is because companies have become much more cost-efficient after surviving a string of lean years. And that’s not a bad thing, Johnston said.

“The decade of capex boom out west was tremendously beneficial for Canada and Albertans, but it also caused tremendous cost inflation,” he said.

“While what we’re seeing right now is not as construction-heavy and not as employment-heavy – and those are two very, very large downsides – the upside is that you’re much more competitive in a much more competitive oil market,” Johnston said.

In a report released this week, the International Energy Agency (IEA) hiked its oil demand growth forecast for the coming year by 200,000 barrels a day, to 3.3 million barrels a day.

According to the IEA, global oil demand will exceed pre-pandemic levels this year due to growing Covid-19 immunization rates and the fact that the new Omicron variant hasn’t proved severe enough to force a return to strict lockdown measures.

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