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Charles Schwab and private equity firm Abry Partners are taking a minority stake in independent RIA network Dynasty Financial Partners, according to a company announcement.
As a result of the new investment, and the current uncertainty in public equity markets, Dynasty said it will withdraw its Registration Statement Form S-1, initially filed with the SEC at the beginning of this year, abandoning current plans to pursue an initial public offering.
“After evaluating the state of the public markets, our board decided to have a handful of conversations with potential private investors,” Dynasty CEO Shirl Penney said in a statement. “Having been afforded the luxuries of optionality and time, there were two requirements that were atop my list as we went through the process—partnership and alignment. I am delighted to say that several firms viewed the process in the same light and am excited to welcome Abry and Schwab to sit alongside our already extremely supportive group of investors.”
The amount of investment by the two firms was not disclosed, but several of Dynasty’s existing investors and board directors also invested capital in the round, the firm said. Dynasty said it had executed an “equity swap” with several of the advisory firms in its network, taking minority stakes in the firms in return for Dynasty equity.
The company said it plans to use money from the investment to boost technology and tech integrations, as well its core service offerings. It said it will further buildout of its TAMP offering and add additional staff. The company also will invest more money in Dynasty Capital Strategies, and possibly pursue a merger or acquisition at the corporate level.
Earlier this year, Dynasty closed on a $50 million credit facility from RBC Capital Markets, UMB Bank, J.P. Morgan, Citibank, and Goldman Sachs Bank.
In January of this year, filed for a $100 million IPO, and later amended it. But given the recent decline in the equity markets, Dynasty executives appear to have abandoned those plans.
“At a time when many businesses in the space are forced to hunker down and play defense, dragged down by leverage and rising interest rates, Dynasty is positioned to charge onto the offensive with fresh, friendly capital, a fortress balance sheet, and favorable margins,” Dynasty CFO Justin Weinkle said in a statement. “Despite market volatility, the ‘Era of Independence’ continues to experience tailwinds as Dynasty positions to invest and continue executing on behalf of its clients and investors.”
Charles Schwab serves as the custodian for over half of the $72 billion in assets under advisement in the Dynasty network, according to the announcement.
Boston-based private equity firm Abry Partners is a leveraged private equity investor, with previous investments in Beacon Pointe and Millennium Trust Company in the wealth management space.
“When looking at the RIA space and the growing ecosystem around it, Dynasty was one of the select brands we had been following for some time. We are thrilled to have the opportunity to invest in the leading wealth technology and integrated services platform in the RIA space and are looking forward to putting all of Abry’s resources behind the growth of the firm and its clients,” Abry Partners Partner James Scola said.
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