RidgeWorth breaks from SunTrust in private-equity deal

With funding from Lightyear Capital, employees will acquire RidgeWorth at a price of up to $265 million

Dec 11, 2013 @ 11:41 am

By Joyce Hanson

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(Bloomberg News)

RidgeWorth Capital Management Inc. said Wednesday that it is leaving its longtime owner, SunTrust Banks Inc., to create a separate investment company in a deal funded by private-equity firm Lightyear Capital.

In partnership with Lightyear, employees of RidgeWorth have agreed to acquire RidgeWorth from SunTrust for a price of up to $265 million.

The sale is expected to close during the second quarter. It is subject to customary closing conditions, including the consent of certain RidgeWorth investment advisory clients.

Ashi Parikh, RidgeWorth's chief executive and chief investment officer, said that his firm has been working toward independence for the past several years by getting its infrastructure and client teams ready for a transition.

“We wanted to make sure we kept our brand. This is about investment and growth,” Mr. Parikh said, adding that RidgeWorth hopes to acquire future partners. It also will look to keep growing organically with its operating platform of technology, risk management, portfolio accounting, trading operations and compliance.

The firm's employees and Lightyear will form a holding company, Mr. Parikh said.

“The expansion of employee ownership will take our firm to a new level. Ownership is always a good thing,” Mr. Parikh said.

The sale price consists of up to $245 million to be paid at closing with up to $20 million in additional proceeds based on retention of some assets.

SunTrust, which had $189.4 billion in assets under advisement as of Sept. 30, estimates that the after-tax gain on the transaction will total $50 million. As of Sept. 30, RidgeWorth contributed about $25 million to SunTrust's year-to-date net income.

RidgeWorth is a nearly 30-year-old multi-boutique asset management firm with $50.6 billion in equity and fixed-income assets under management as of Nov. 30.

RidgeWorth Investments serves as a holding company that owns five wholly owned boutiques and one minority owned boutique. The leadership of RidgeWorth and its affiliated boutiques will continue to manage the business and investment strategies.

“We think our multi-boutique affiliate model will be very successful. It's one that the clients and gatekeepers have embraced,” Mr. Parikh said.

Lightyear primarily invests in North America-based, middle-market financial services companies. It has raised more than $2.5 billion of capital through its three affiliated PE funds.

Lightyear has completed investments in financial services firms including asset management, banks, brokerage, financial technology and insurance.

SunTrust Banks serves a broad range of consumer, commercial, corporate and institutional clients. As of Sept. 30, it had total assets of $171.8 billion and total deposits of $128.9 billion.

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