Warburg Pincus to buy majority stake in Kestra Financial

Current owner Stone Point Capital, Kestra management and some advisers will retain equity positions in the indie B-D

Feb 25, 2019 @ 10:23 am

By Greg Iacurci

Kestra Financial Inc. has agreed to sell a majority stake in the firm to private-equity shop Warburg Pincus, the independent broker-dealer announced Monday morning.

Stone Point Capital, the private-equity firm that currently holds a majority interest in Kestra, will keep a minority interest. Kestra's management team will retain equity in the firm, and it is anticipated that "a number" of advisers will also retain equity, the firm said.

Terms of the deal, which is expected to close in the second or third quarter this year, were not disclosed.

Kestra Financial in 2017 was ranked the 15th largest independent broker-dealer in the industry, when counting total revenue, according to InvestmentNews data. Kestra reported $475.4 million in total revenue for the year, with 1,876 registered reps and financial advisers. The firm's assets under management were $75.8 billion at the time.

Kestra Financial was formerly known as NFP Advisors when it was owned by insurance brokerage and consultant NFP Corp. The broker-dealer was sold in 2016 to Stone Point Capital, which bought a majority stake at the time and changed its name to Kestra.

InvestmentNews reported Feb. 15 that Warburg Pincus was among the private-equity managers interested in acquiring Kestra. The firm was being valued at between $600 million and $800 million, about eight to 10 times Kestra's EBITDA, or earnings before interest, taxes, depreciation and amortization, sources said at the time.

Kestra said there will be no impact to the firm's employees or advisers related to the transaction, including no repapering requirement for advisers' clients.

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