Osaic’s private equity owner Reverence Capital Partners has closed on a recapitalization of the broker/dealer, with Bain Capital entering as a new investor. The deal raises more than $2 billion in fresh capital for Osaic, and allows Reverence to retain majority ownership.
According to Reverence Capital, the recapitalization will repay existing investors in the private equity firm’s funds while committing more capital to Osaic’s balance sheet through a continuation vehicle for “future growth initiatives.” The governance and board composition will remain the same.
According to Reverence Capital co-founder and Managing Partner Milton Berlinski, the recapitalization “underscores our strong belief in Osaic’s strategy, vision and future.”
Osaic CEO Jamie Price said this represents a “new, strong group of leading investors who will provide capital to help fuel the next phase of our growth.”
The lead investors in the continuation vehicle include Ares Secondaries funds and Lexington Partners, as well as other institutional investors. Private equity firm Bain Capital (which has minority stakes in Carson Group and Envestnet) is a new investor.
In addition to the continuation vehicle capital, Reverence also committed capital from its current flagship Fund IV. The firm intends to use the new capital to support organic growth, mergers and acquisitions and “other strategic initiatives.”
Reverence Capital first invested in Osaic in 2019 (before the firm’s “Journey to One” initiative, in which Osaic rebranded and integrated its eight affiliated broker/dealers under one name and structure).
Dimple Shah, an executive vice president of Strategy & Client Experience at Osaic, said Reverence “loves the business” and “believes there’s still a lot of growth opportunities,” noting that continued ownership stakes were an industrywide trend, as PE investors find wealth “very attractive from a structural tailwind perspective.”
“There’s been so much consolidation in our space. There just aren’t that many scaled wealth management firms,” she said. “So I think for these PE firms that are current investors, they’re looking to continue to participate in the trend and in this cycle.”
Earlier this year, Osaic completed a debt refinancing, including a plan to reprice its senior secured bank credit facility, increase its 6.75% senior secured notes due 2032 by $500 million, and add $250 million to its 8% senior unsecured notes due 2033.
Moody’s did not change Osaic’s ratings and maintained the company’s stable outlook, finding it “credit positive as it extends the company’s debt maturity profile, simplifies its capital structure, and is expected to reduce its weighted average cost of debt.”
Their unchanged outlook was also backed by Osaic’s move into the fee-only wealth management space, which Moody’s expected would support EBITDA growth.
Jefferies served as the financial advisor on the recapitalization, and Kirkland & Ellis served as legal counsel to Reverence.
Citywire was the first to report the capital raise.
