Banking

Falfurrias signs agreement to sell interest in investment advisory firm

Charlotte-based private equity firm Falfurrias Capital Partners said Monday it has signed an agreement to sell its controlling interest in a Virginia investment advisory firm to exchange operator Nasdaq for $225 million.

Falfurrias, whose chairman is former Bank of America CEO Hugh McColl, said its interest in Richmond-based Dorsey, Wright & Associates will be sold in a debt-and-cash deal.

The sale is expected to close in the first quarter of this year.

McColl co-founded Falfurrias in 2006 with Marc Oken, former chief financial officer for Charlotte-based Bank of America. In 2011, Falfurrias invested in Dorsey as part of a strategy to use Falfurrias’ expertise and contacts within the financial services industry.

Oken, managing partner for Falfurrias, said now is a good time to sell the 55 percent interest in Dorsey, which deals in exchange-traded funds. Many exchange-traded funds track indexes, such as the Standard & Poor’s 500.

“The market was hot on ETFs, and we wanted to capitalize on that,” Oken said.

The deal gives Nasdaq Dorsey’s 17 exchange-traded funds. Oken said Nasdaq will be able to use its large distribution system to further Dorsey’s growth. The Wall Street Journal reported that the deal will make Nasdaq’s global indexes segment one of the largest providers of the fast-growing smart-beta indexes.

Through the sale, Falfurrias will exit its inaugural investment fund. Falfurrias is now investing in companies through its second fund, valued at about $127 million, of which roughly half has been invested, Oken said.

Dorsey is an independent and privately owned firm. Among other things, it provides investment research as well as professional money management for financial advisers and individuals.

Falfurrias’ strategy is to acquire or invest in growth-oriented middle-market companies. It employs 15 people in the Charlotte metro area at its headquarters in Bank of America’s corporate center at Trade and Tryon streets.

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