Apex Clearing, the $92 billion custodian that services robo advisors, retail brokerages and RIAs, plans to go public via a merger with a special purpose acquisition company.
The merger is expected to take place in May or June.
Apex says the deal, which values the firm at $4.7 billion, will help it add scale and innovate as well as bolster its offering to traditional RIAs, according to documents filed with the SEC, as well as statements made on a pre-recorded call with executives from Apex and Northern Star Investment Corp II, the SPAC.
“There will be ample capital on Apex’s balance sheet to drive more digital disruption, innovation, strategic acquisition of both companies and technology and — most importantly — organic growth,” said Jon Ledecky, president of Northern Star Investment Corp II, who spoke on the pre-recorded call.
Apex CEO, Bill Capuzzi, and president, Tricia Rothschild, will remain in their current positions, according to the clearing firm. The company’s client service and operational teams will also stay intact, according to a letter Capuzzi sent to clearing clients the morning of Feb. 22.
The deal was approved by the boards at Northern Star and Apex, although it is still pending regulatory and stockholder approval, as well as other customary closing conditions, according to a
Apex serves more than 200 firms representing more than 13 million customer accounts. It has opened more than 1 million crypto accounts for clients in 2021. The company, whose clients include Betterment and SoFi, has been moving into traditional wealth management custody over the last year.
“We, at this moment, do not have a lot of human advisor relationships,” Rothschild told Financial Planning in an interview in mid-February, prior to the merger announcement. “That's where we're going. That's where we see a lot of growth potential,” she said.
Right now, the company primarily works with traditional RIAs via third-party firms that offer the front-end services and products advisors need to conduct business. Apex powers the underlying account opening and trading capabilities and technology, including crypto trading and direct indexing. The company’s partners include the startup custodian Altruist, FusionIQ and Orion Advisors Services.
“We want to be true to our core,” Rothschild said in the pre-merger interview. “Strategically our goal is to be really great at custody and clearing and not necessarily over-build into the front end.”
Capuzzi emphasized Apex’s room for growth in the RIA space on the pre-recorded call, noting that the firm has “less than 1% market share” of traditional advisory and wealth management assets.
“As traditional advisory continues to digitize, we are in a strong position to capture and expand market share,” he said.
The merger announcement comes shortly after clearing firms and their role in the marketplace had been put in the spotlight. During volatility in stocks like GameStop and AMC, clearing firms including Apex
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Following the deal, Apex will have approximately $1 billion of available capital on its balance sheet, according to Ledecky.
“The company will also significantly delever its balance sheet in the process through the repayment of $120 million in debt,” he said on the pre-recorded call.
In the letter to firms that use Apex, Capuzzi said that the deal would be a “significant milestone” and “a natural next step” for the company.
“The transaction will provide us with substantial resources and flexibility to increase the scale of our platform and expand our offerings to better serve you,” he wrote.
Apex says it expects to be listed on the New York Stock Exchange under a new ticker symbol, "APX". The clearing firm is a subsidiary of private investment and fintech firm Peak6 Investments.
