Wealth administration has been the main target of Lightyear Capital since its founding in 2000 by Don Marron, a financier, artwork collector and lifelong New Yorker. Previous to launching the personal fairness agency, Marron was CEO of PaineWebber, the retail brokerage agency, and engineered the agency’s sale to UBS. Marron handed away in 2019.
However brokerage experience nonetheless flows by means of his agency. Mark Vassallo, managing companion and member of Lightyear’s funding committee, labored alongside Marron at PaineWebber and had an integral position in negotiating and managing the sale. Just lately, Lightyear introduced on Tom Naratil, former co-president of UBS World Wealth Administration, as an working companion.
“In at present’s surroundings for monetary companies, there are clearly a major variety of nice alternatives and administration groups and firms which might be in search of progress capital,” Naratil stated. “And there’s plenty of progress capital on the market as effectively. However what portfolio corporations are in search of is greater than only a examine. Additionally they need to see that area experience.”
Lightyear put that insider experience to work when it accomplished its first deal within the wealth administration area, buying three unbiased dealer/sellers from insurance coverage big ING in 2010. The personal fairness agency rebranded the enterprise to Cetera Monetary Group. In 2012, with Lightyear’s assist, Cetera acquired Genworth Monetary Funding Providers.
“As soon as there actually was a separation between manufacturing and distribution, these (insurance coverage) companies started to divest what finally grew to become non-core,” stated Max Rakhlin, a managing director at Lightyear, who works on the wealth administration investments.
“Due to the legacy of [Lightyear] and the experience, realizing an excessive amount of in impact, the agency was in a position to unlock these companies and actually stand them up. In some ways, they have been at scale startups that simply didn’t have management over their very own future.”
The 4 b/ds have been purchased by RCS Capital in 2014, the unbiased b/d community led by Nicholas Schorsch, in a $1.15 billion money deal, a pleasant return for Lightyear and what many within the trade stated was a steep a number of on the time.
Lightyear made one other splash in 2016, when it picked up one other b/d community, Advisor Group, from AIG. Like Cetera, that concerned pulling a community of advisors out of an insurance coverage firm and standing it up by itself. They employed present CEO Jamie Worth, the previous head of the wealth administration advisor group of the Americas at UBS.
In 2019, they bought the community to non-public fairness agency Reverence Capital Companions for $2.3 billion.
Lightyear has since invested in a number of registered funding advisory companies, together with Wealth Enhancement Group, and presently owns Allworth Monetary and Cerity Companions, each fast-growing RIAs and energetic acquirers.
Lightyear will sometimes are available in as a majority proprietor, and Vassallo says there’s no prescribed time horizon for exiting.
He acknowledges that within the early days of personal fairness funding within the trade, there was angst over taking personal capital and the way it might influence the corporate’s work with advisors and its responsibility to shoppers, and what a “monetization occasion” would imply for everybody concerned—good and dangerous.
“I feel all that anxiousness is now gone as a result of there’s enough proof factors that, in actual fact, these companies develop,” he stated. “They do higher by the advisor, they do higher by the consumer, they’re placing in enough compliance and expertise buildings. However there was this large, ‘Please don’t ever exit till everybody (is able to do) rather well.’ After which, impulsively, it’s anticipated that companies will undergo their lifecycle and have a number of companions as they proceed to develop and scale.”
With billions of {dollars} invested, PE companies are driving the trade’s speedy consolidation. Listed below are a few of the most energetic individuals:
Thomas H. Lee Companions – The Energetic Operators
Genstar – The Majority Companion
Bain – The Structured Dealmaker
Stone Level Capital – Extra Alternatives Than Capital
