Will Kestra change hands again in latest private equity play?
Kestra Financial may be on the market for prospective bidders again — just 2 1/2 years after private equity firm Stone Point Capital purchased the independent broker-dealer.
Stone Point retained the same team from Goldman Sachs that advised Cetera Financial Group in the $1.7 billion sale of the IBD network’s majority stake to Genstar Capital earlier this year, according to a report from InvestmentNews. Bidding may start as early as next week, the report states.
Neither Stone Point nor Kestra, which has 2,300 advisors across the firm and its subsidiaries H. Beck and Kestra Private Wealth Services, have confirmed it.
Recently, CEO James Poer invited Financial Planning to tour Kestra’s home office in Austin, Texas, where he dismissed industry criticism of PE firms as temporary owners looking to monetize their investments quickly.
“A good private equity firm should want return on their investment,” Poer said last month. “That doesn’t really change anything for the advisors that are served. It’s capital structure, that’s it.”
Representatives for Goldman declined to comment, while representatives for Kestra and Stone Point did not immediately return requests for comment.
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
The practice is at least the second this year to jump from the Advisor Group firm to its similarly sized rival.September 20
Royal Alliance Associates will absorb the firm following the deal, which would push the network’s headcount above 6,800 advisors.June 21
PE buyers are fueling record M&A activity in wealth management for the past five years, and transactions are on pace to reach another record this year at more than 180, according to consulting firm Echelon Partners. The total number of IBDs has fallen by more than a quarter over the past decade.
Kestra may not demand a price as high as the reported tag for Cetera, but similarly-sized firms have commanded several hundreds of millions of dollars in recent deals. The firm has never stated publicly what Stone Point paid for it in June 2016 — or what it paid for H. Beck last December.
“Our business model is designed to team up with experienced management teams poised for even greater success, and Kestra is no exception,” Stone Point CEO Chuck Davis said in a statement on the closing of the firm’s deal to buy the former NFP Advisor Services from insurance company NFP.
Kestra and Kestra PWS generated $475.4 million in revenue last year, a 12% rise from 2016, according to the firm’s responses in the annual FP50 survey of the largest IBDs. Kestra is the No. 14 IBD, while H. Beck is No. 38, with $114.7 million in 2017 revenue.