Private equity firm Hg Capital plans to buy Riskalyze, a company that provides portfolio risk assessment software to financial advisors.
Terms of the transaction were not disclosed. The deal is a recapitalization, with Hg taking over as previous investors — such as FTV Capital, which invested $20 million in Riskalyze in 2016 — cash out, according to
Klein will reinvest the majority of his holdings into the recapitalized firm and will remain CEO and a member of the board of directors.
In a statement, Klein called Hg “the perfect partner” and said the recapitalization deal would help Riskalyze with future innovation and growth. The capital will also help fund future acquisitions. Riskalyze and Hg declined to provide additional comment.
Riskalyze provides advisors with a digital questionnaire to assess a client’s risk tolerance, assigning each client a “risk score” that can be used in financial planning and investment allocation. The firm also offers an automated trading platform and investment model marketplace.
Riskalyze is the most popular risk tolerance software tool among independent RIAs, with more than a quarter of market share, according to
“I think from Riskalyze’s perspective, it stops a lot of the questions about if they are going to remain independent or get gobbled up by somebody else,” says T3 president Joel Bruckenstein. “Klein reinvesting his own stake shows his belief that [Riskalyze] still has even better times ahead.”
Recently, Riskalyze has focused on growing among large wealth management firms, signing enterprise deals with
“Riskalyze has seen significant momentum in the last few years,” says Max Dewez, a director at Hg’s New York office, in a statement. “The team have successfully established themselves as providing a best-in-class SaaS tool that solves real business challenges in a sector still seeing increasing tech adoption.”
However, other wealthtech companies are getting into the risk tolerance game. Orion Advisor Services — which
“Obviously risk has been a hot category lately,” Bruckenstein says. “It’s not a surprise that it’s desirable for a firm like Hg.”
“I think it’s healthy for the industry that a lot of tech providers are offering multiple risk solutions, and I think advisors would be well advised to make use of these tools sooner than later,” he added.
The deal gives Hg exposure to the U.S. wealth management industry. In 2018, the private equity firm
Dewez, along with Hg’s Sebastien Briens and Richard Earnshaw, will join Riskalyze’s board and expect to make additional appointments in the future.
The company’s board is currently without a leader after former chairwoman Lori Hardwick
