Piper Jaffray Companies on Wednesday said it is selling Advisory Research Inc. through two separate transactions and exiting its traditional asset management business, according to a news release.
The Minneapolis-based investment bank and financial services company said it has signed a definitive agreement to sell the midstream energy asset management business of Advisory Research to Tortoise Capital Advisors of Leawood, Kan.
The firm also has entered into a letter of intent to sell the remaining Advisory Research business to a partner group led by Matthew Swaim, managing director and executive committee chairman at Advisory Research in Chicago.
Piper Jaffray said it expects to generate net cash proceeds from these two transactions of about $60 million to $70 million, exclusive of potential earn-out proceeds. The transactions are expected to close in the second half of 2019, the release said.
“These transactions sharpen our focus with respect to core strengths” said Chad Abraham, chief executive officer of Piper Jaffray. “We intend to reinvest the capital from this sale in our core areas of expertise through both organic investments and corporate development activity in order to generate higher returns for our shareholders.”
Piper Jaffray acquired Advisory Research in 2010 for $218 million. Since that time, the asset management industry has continued to evolve in terms of product availability and distribution capabilities, the release said.
It added that during this same timeframe, Piper Jaffray significantly scaled its banking platforms to become a market leader in its areas of focus, creating enhanced financial performance and shareholder returns. These two factors combined led to the decision to pursue a sale. Advisory Research currently represents about 5 percent of Piper Jaffray’s adjusted net revenue, the released said.