Kestra Financial’s pending recapitalization reflects the changing shape of the independent broker-dealer sector, ushering in a new private equity investor while cashing out two insurance firms’ shares.
Majority owner Stone Point Capital has agreed to sell its stake in Kestra to Warburg Pincus, while keeping a significant minority position. Warburg, the 50-year-old global private equity firm which has former Treasury Secretary Timothy Geithner as its president, also boasts a long track record with IPOs.
James Poer, the longtime CEO of Austin, Texas-based Kestra — which has 2,300 advisors across three subsidiaries — gave the first official word that the deal had been reached to Financial Planning. The parties didn’t disclose the financial terms of the agreement.
Poer said the transaction should close in the second quarter pending regulatory approval, roughly three years
Minority stakeholder insurance firms Securian Financial and NFP would no longer be investors after the transaction, according to Poer. It would be “premature to discuss future capital structure” after the deal closes — including the possibility of going public under Warburg, he says.
“They're the best of the best, and they're the long-term capital partner that is in line with our position and our goal of building a premier wealth management business,” Poer says. “We entertained a few different options and felt this was the best for our future.”
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In an internal memo, CEO James Poer pledges that any change to the firm’s capital structure "would be made with your business in mind first."
December 21 -
The IBD and its subsidiaries’ 2,300 advisors appear to be facing a sale by its parent, with bidding reported to be starting as soon as next week.
December 14 -
The executive argues the firm’s ownership structure is giving it a leg up — rather than posing the issues for advisors decried by critics.
November 29
Macroeconomic trends and matters of convenience will move advisors, assets and markets next year in the ever-changing wealth management space.
Insurance firms exiting the IBD sector and PE firms eager to get into it have helped fuel
At the firm’s conference in Austin earlier this month, Poer and other executives met with Kestra advisors to discuss a potential new capital structure. Kestra strived to keep “an honest dialogue” with its advisors during the process, Poer says.
“This is all about fueling our ability to continue to build a really top level value stack for the people we serve,” he says. “Advisors understandably get concerned about rumors that have been flying around the press. And they get misinformed by competitive recruiters about our process. They're just seeking clarity.”
Stone Point would keep a seat on Kestra’s board, and Warburg will pick one up, according to Poer, who did not identify the point person handling Warburg’s Kestra investment. Longtime co-CEOs Joseph Landy and Charles Kaye, along with Geithner — who
The acquiring firm, which a Feb. 15 Investment News
Kestra's "focus on providing best-in-class service and technology to its advisors and their clients positions the business for an exciting future," Thimmaya said.
Warburg’s 17 funds have
IPOs in the past two years for Warburg portfolio firms include the Vietnamese bank
“We really enjoy all the benefits that being private brings to us and all of the advisors that we serve,” he says.
Funds managed by Stone Point had
Representatives for Stone Point didn’t respond to requests for comment.
NFP’s parent firm
Poer has criticized what he sees as the wealth management
“There was misinformation in the marketplace. We felt it was necessary to provide clarity and be open communicators,” Poer says. “We don’t view this as selling the company, we view this as capitalization evolution.”
Kestra and Kestra PWS boosted their revenue by 12% year-over-year in 2017 to $475.4 million,
