Home Advisor Insights Dynasty Financial ditches IPO, sells stakes to Schwab and private equity firm

Dynasty Financial ditches IPO, sells stakes to Schwab and private equity firm

by WOOWinvest
0 comment
Dynasty Financial ditches IPO, sells stakes to Schwab and private equity firm

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 said in a press release.

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 a tiny slice of the 743 firms that raised $180 billion in 2021, a blockbuster year, Nasdaq data cited by Reuters shows.

“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, the statement said. The firm said it had executed “minority equity investments in many of its RIA clients,” a swap transaction in which most RIAs received Dynasty equity in exchange for their equity. Dynasty’s top firms include Geller Advisors in New York, Summit Trail Advisors in Chicago and Americana Partners in Houston.

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 $50 million in financing in September from a group of banks including RBC Capital Markets and Morgan Stanley.

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 stand to benefit from Dynasty’s IPO plan under a tax agreement.

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 has not typically invested in platforms or separate RIAs, take a stake in the firm.

In June, Schwab rebranded its $146 billion registered investment adviser, Schwab Private Client Investment Advisory, to Schwab Wealth Advisory, Investment News reported. In the Dynasty statement, Bernie Clark, the head of Schwab Advisor Services, which provides custody, trading and support to independent advisors, said that “We could not be more excited for the ongoing growth that is occurring in the RIA ecosystem and are proud to be leaders in the space.”

You may also like

Leave a Comment

Our Mission is to help you make better trading decisions by providing actionable investing content, comprehensive tools, educational resources and assist you in making more money in the stock market.

Latest News


Subscribe my Newsletter for new blog posts, tips & new photos. Let's stay updated!

@2022 – All Right Reserved. Designed and Developed by WOOW Invest

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy