Kudu Investment Management Acquires Minority Stake In Wealth Manager First Long Island Investors

NEW YORK, July 29, 2019 — Kudu Investment Management, LLC, a provider of permanent capital solutions to asset and wealth managers worldwide, has acquired a passive minority interest in Jericho, N.Y.-based First Long Island Investors, LLC which oversees approximately $1.6 billion in assets for high net worth individuals and families. Terms were not disclosed.

First Long Island was co-founded in 1983 by Robert D. Rosenthal and Ralph F. Palleschi, prominent local entrepreneurs who earlier in their careers were senior officers at both Entenmann’s national baked goods company and the Islanders pro hockey franchise. Rosenthal conceived First Long Island while working with Palleschi on the financial and investment needs of the Entenmann family. The operating and investing experience they gained from these endeavors made them attractive to similar clients – business owners, entrepreneurs, and wealthy families. They are well-known for delivering investment and wealth management services rooted in their core principles of trust, service, and performance.

“Bob and Ralph and their team have built an exceptional franchise, serving entrepreneurs and other high net worth individuals in the greater New York area. We look forward to them continuing their uniquely client-centric approach that is evident in every aspect of the relationship from asset allocation to service, communication, and more,” said Kudu CEO Rob Jakacki.

“The Kudu team really understood our service culture and entrepreneurial DNA. We were attracted to their philosophy of only investing in firms that continue to be managed and controlled entirely by their existing owners,” said Rosenthal, who is First Long Island’s chairman, CEO, and CIO. “Kudu also brings us a top-tier and growing network of partner firms and relationships we hope to leverage as we enter our next phase of growth.”

Kudu’s partners include West Coast wealth manager B|O|S; New York property fund manager Savanna; alternative asset platform TIG Advisors; real assets investor Versus Capital; and European alternative credit specialist Fair Oaks Capital. Kudu’s partners collectively manage approximately $19 billion in AUM for institutional and individual investors.

Sandler O’Neill & Partners, L.P. acted as financial advisor and Seward & Kissel LLP served as legal advisor to First Long Island Investors, LLC. Dechert LLP served as legal advisor to Kudu Investment Management, LLC.

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New twist on private equity in RIA space: Silent minority ownership

Upstart Kudu Investment Management acquires piece of
a second advisory firm

InvestmentNews
By Jeff Benjamin | July 29, 2019 – 1:58 pm EST

Kudu Investment Management acquired a minority stake in First Long Island
Investors in a deal that highlights a new twist on private-equity capital finding
its way into the advisory space.

The stake in the $1.6 billion RIA marks Kudu’s seventh minority investment
and its second investment in a registered investment adviser.

Unlike traditional private-equity investors, which often take majority
ownership stakes and operate under strict liquidity guidelines that could
mean selling the stake in seven years, four-year-old Kudu claims to be a longterm
investor that is buying risk and reaping yield directly from an RIA’s
income stream.

“The difference between us and private equity is our capital is permanent,”
said Charlie Ruffel, managing partner at Kudu.

“Private equity gets returns through follow-on transactions within a certain
period of time, but we don’t have that obligation,”Mr. Ruffel said. “We’re
always the minority investor, which means when we make these investments,
we back the management of the firm. What we’re trying to do is solve for
capital problems, but the day after the deal they are in as much control as
they were the day before.”

Mr. Ruffel declined to say how much Kudu invests in firms or what kind of
yield it earns in return, but Kudu and its partners collectively manage $19
billion for institutional and individual investors, according to a press release.
Kudu was founded in 2015 and is backed by capital partner White Mountains
Insurance Group.

In addition to owning stakes in five asset management firms, Kudu has also
purchased a minority share of Bingham Osborn & Scarborough, a $3.3 billion
RIA based in the San Francisco area.

David DeVoe, managing director at the investment bank DeVoe & Co., said he
is not surprised to see more creative forms of capital entering the RIA space.
“A growing number of advisers are realizing that the value of their RIAs has
outstripped the buying power of next-generation advisers,” Mr. DeVoe said.
“It’s a good problem to have, until it becomes a really big problem.”

For Jericho, N.Y.-based First Long Island, taking on a silent minority partner
that adds some capital to the firm was the perfect strategy.

“The Kudu team really understood our service culture and entrepreneurial
DNA,” said Robert Rosenthal, First Long Island’s chairman, chief executive
and chief investment officer.

“We were attracted to their philosophy of only investing in firms that continue
to be managed and controlled entirely by their existing owners,” Mr. Rosenthal
said. “Kudu also brings us a top-tier and growing network of partner firms and
relationships we hope to leverage as we enter our next phase of growth.”