Schorsch isn't done after Investors Capital

Deal priced at $7.35 a share, representing huge premium to investors

Oct 2, 2013 @ 10:34 am

By Bruce Kelly

schorsch, investors capital, mergers & acquisitions, broker-dealer, REITs
+ Zoom

Fresh off Wednesday morning's announcement of one broker-dealer acquisition, Nicholas Schorsch said that he will continue to pursue potential deals to expand and diversify his group of business.

RCS Capital Corp., one of Mr. Schorsch's companies, agreed to acquire Investors Capital Holdings Ltd., which controls an independent broker-dealer with 550 reps and advisers. The deal marks the second independent-broker-dealer acquisition of the year for Mr. Schorsch, who is executive chairman of the board of RCS Capital.

Although he would not name specific targets, Mr. Schorsch said RCS Capital remains in the hunt for deals.

“I can't tell you we're done,” Mr. Schorsch said in an interview. “We'd love to look at insurance and other platform sponsors that are producing product.”

As with other recent acquisitions, Mr. Schorsch is keeping the management team of Investors Capital in place. He said that Tim Murphy will remain as chief executive.

RCS Capital is paying a significant premium for Investors Capital. In a filing with the Securities and Exchange Commission, RCS Capital said it expects to acquire the publicly traded Investors Capital Holdings for about $52.2 million, or $7.35 per share. Many holders of Investor Capital stock bought shares from its founder, Ted Charles, in 2011 for $4.25, when he retired and sold his stake. The expected offering price by RCS Capital represents a 73% premium over that price.

Mr. Schorsch noted that the sale of Mr. Charles' shares represented less than half the company and that RCS Capital is buying the entire company.

“We paid what the company is worth in today's market,” he said. Investors Capital “has grown its earnings and assets under management. The company has changed dramatically in the last three years.”

One immediate benefit to RCS Capital, which trades on the New York Stock Exchange under the symbol RCAP, will be savings from Investors Capital when it no longer has the expense of meeting regulatory guidelines as a public company, Mr. Schorsch said.

Speculation regarding the sale of Investors Capital, which sports 550 affiliated registered representatives and advisers, has been building for the past month. Early in September, Investors Capital Holdings, the holding company for the broker-dealer, saw a sizable spike in trading and in one day saw trading volume top 430,000 shares. The microcap stock typically trades closer to 13,000 shares per day.

Wednesday morning, trading in Investors Capital shares was heavy, with more than 100,000 shares changing hands before noon. The share price ranged between $5.60 and $6.80, still below Mr. Schorsch's expected acquisition price.

Mr. Schorsch, already a dynamo in the nontraded-REIT business, on an acquisition tear.

On Tuesday, he announced his first foray into mutual funds, which will gain him the potential to widen the distribution of his array of investment products. Hatteras Funds, a boutique alternative investments mutual fund firm with $2 billion in assets and six funds will be acquired by a subsidiary of RCS Capital.

Mr. Schorsch is CEO of American Realty Capital, which currently sponsors close to 12 illiquid nontraded-investment programs. Those are predominantly nontraded real estate investment trusts.

Among other deals, RCAP Holdings LLC, which is controlled by Mr. Schorsch, in June announced that it would acquire First Allied Holdings Inc., which included First Allied Securities Inc. and The Legend Group.

Combined, First Allied and Investors Capital have more than 2,000 affiliated financial advisers and registered reps. That makes Realty Capital one of the largest networks of such reps and advisers in the financial advice industry.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Upcoming Event

Oct 17

Conference

Best Practices Workshop

For the fifth year, InvestmentNews will host the Best Practices Workshop & Awards, bringing together the industry’s top-performing and most influential firms in one room for a full-day. This exclusive workshop and awards program for the... Learn more

Featured video

INTV

AXA's Christine Nigro: How to handle being the only woman in the room

Women face unique challenges as they move into the C-suite, and they need to remember to always be themselves and let their professional strengths shine, according to Christine Nigro, vice chairman at AXA Advisors.

Video Spotlight

Will It Last As Long As Your Clients Do?

Sponsored by Prudential

Video Spotlight

The Catalyst

Sponsored by Pershing

Latest news & opinion

Brian Block's $4 million bonus was tied to a key metric at ARCP

Prosecution rests case in fraud trial against CFO of American Realty Capital Properties.

Edward Jones is winning the Google search war

Brokerage firm's digital marketing investment helps land it at the top of local and overall search engine results, report finds.

Voya's win in 401(k) fee suit involving Financial Engines bodes well for other record keepers

Fidelity, Aon Hewitt and Xerox HR Solutions are currently defending against similar fiduciary-breach claims.

Collective investment trusts getting more attention from 401(k) advisers

The funds are catching on due largely to lower costs and more product availability, but come with some inherent drawbacks.

Vanguard rides robo-advice wave to $65B in assets

Personal Advisor Services, four times the size of its closest competitor, combines digital and human touch.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print