Warburg Pincus among private equity managers interested in acquiring Kestra Financial

Warburg Pincus among private equity managers interested in acquiring Kestra Financial
Sources say Kestra is being valued at between $600 million and $800 million, about eight to 10 times EBITDA.
FEB 15, 2019

Warburg Pincus is among the private equity managers interested in acquiring Kestra Financial Inc., according to two industry sources. Bids were due this week for the independent broker-dealer, and a sale could be announced within the next few weeks, according to the sources, who did not want to be identified. InvestmentNews in December reported that Kestra was on the block. The firm is being valued at between $600 million and $800 million, which is about eight to 10 times Kestra's EBITDA, or earnings before interest, taxes, depreciation and amortization, the sources said. 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 private equity shop Stone Point Capital, which bought a majority stake at the time and changed its name to Kestra. Stone Point Capital is interested in retaining some equity position in Kestra, the sources added. James Poer, the CEO of Kestra, did not return a call on Friday seeking comment. A spokeswoman for Warburg Pincus, Kerrie Cohen, declined to comment. Warburg Pincus has $43 billion in private equity investments under management, and 180 companies in its portfolio, according to the firm's website. Past investments in the financial services sector include Yodlee and The Mutual Fund Store. The other bidders interested in Kestra are also private equity shops, according to sources. Private equity investors have show a continuing interest in buying buy independent broker-dealers and registered investment advisers. Genstar Capital, which paid $1.7 billion for Cetera Financial and financed the majority of that with junk bonds, is one of the most prominent.

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