National Australia Bank's (NAB) boutique incubator business nabInvest has bought a 33 per cent stake in Lodestar Capital Partners.
Lodestar is an absolute return fund manager, which was established in 2005 by former ING Australian equity fund managers John Morgan and Susie Fenton and former AMP head of tactical asset allocation Dennis Rope.
The firm, which has about $127 million in funds under management, has had a distribution arrangement with NAB's Antares Capital Partners division since 2007.
"We were attracted to the deal as it gives nabInvest the opportunity to take an equity stake in an emerging manager of absolute return funds who we already know well and in whom we have a high level of confidence," nabInvest investment director Nick Basile said.
It is nabInvest's sixth acquisition since the business was established in October 2007.
Morgan said the deal will give Lodestar access to additional resources and nabInvest will provide the firm with extra support in corporate governance.
"There will be a member of nabInvest sitting on our compliance committee," Morgan said.
The remaining stake continues to be owned by the firm's investment team, although in the long term shares would be used as part of a succession plan, Morgan said.
"You would want to give staff members equity, eventually," he said.
Unlike nabInvest's arrangement with Northward Capital, the bank will not hold the majority of voting rights.
"Northward came out of IAG, but we come from a separate, already running boutique," Morgan said. "We'll stay an independent boutique."
NabInvest currently holds voting rights of 51 per cent in Northward, while its economic interest is only 35 per cent. But this will soon change.
"They have a Class B share which adds 16 per cent to their holding, but that will be cancelled in November this year," Northward Capital chief executive Darren Thompson told InvestorDaily.
The total cost of cancelling the voting share will be about four dollars, Thompson said.
