Dynasty Financial Partners scrapped its planned initial public offering amid the grim market on Wall Street and lack of investor appetite for new companies.
The St. Petersburg, Florida-based firm, an alliance of 48 registered investment advisory firms that collectively manage roughly $68 billion in client assets, instead sold minority stakes in itself to private equity firm Abry Partners of Boston and Charles Schwab,
Dynasty spokeswoman Sally Cates declined to say how much money the firm raised or how much equity the two new investors now have. As a result of the fresh capital, Dynasty said it would withdraw its amended filing to sell shares to the public.
The move is a pivot for Dynasty President and CEO Shirl Penney, whose company originally filed to go public last January. Since then, the market for new companies has shrunk by 80%, with 156 companies this year raising $15 billion by listing their shares on the Nasdaq — where Dynasty planned to trade. That's
"After evaluating the state of the public markets, our board decided to have a handful of conversations with potential private investors," Penney said in a statement.
Dynasty provides technology, investment management, capital for acquisitions, back-office functions and consulting to independent advisors and to those advisors who are leaving wirehouses and smaller brokerages to go independent. It takes small equity stakes in some of its "network" firms, meaning investment advisors that operate on its platform. The firms managed $68 billion as of June 30, according to Dynasty's most recent public figures, but markets have fallen since then.
In addition to Schwab and Abry, "many" of Dynasty's 48 network firms — RIAs that operate on its platform — invested in Dynasty as part of the transaction,
Dynasty said it would use the capital infusion to make "meaningful" investments in technology and technology integrations, add services, build out its turnkey asset management platform and invest in talent. The fresh money comes after Dynasty received
Key executives and shareholders will also benefit from the latest infusion. "A portion of the investment round will be used to fund secondary transactions to provide liquidity to long-time shareholders and founders of Dynasty," the firm said. Shareholders stood to benefit from Dynasty's IPO plan
The company said it also planned to invest in the growth of Dynasty Capital Strategies, a financing program for existing and new RIAs to expand through growth on their own or through acquisitions. Dynasty will also "explore select opportunities for corporate development and M&A that would accelerate growth, add capabilities and increase margin in various areas of the business," the firm said.
David Devoe, the founder and CEO of Devoe & Co., a consulting firm and investment bank for wealth management firms, said that the equity swap showed "RIAs voting with their pocket book on the future of Dynasty," a move that gives Dynasty "the greater security of an installed client base." He added that it was "unusual" to see Schwab, which hasn't typically invested in platforms or separate RIAs, take a stake in the firm.
In June,
