Private equity investors take stakes in CAIS, Mather Group

The steady flow of PE money into wealth management illustrates the bullish outlook for the industry's fee-based revenue streams.

The stock market pullback hasn’t dampened the appetite of private equity investors for the predictable asset-based income available across the wealth management industry.

Two new investments announced Wednesday involve alternative investments platform CAIS and The Mather Group, a Chicago-based advisory firm.

CAIS, which has facilitated more than $15 billion worth of transactions on a platform that connects alternative asset managers with financial advisers, is adding Reverence Capital Partners to its group of existing investors, and the group will contribute $100 million.

The investment follows a $225 million round of financing in January by Apollo, Motive Partners, and Franklin Templeton.

The new investment is expected to accelerate CAIS’s mission to modernize how independent financial advisers learn about and gain access to alternative investments. Similar to the capital originally raised in January, the new proceeds will fuel further advancements in CAIS’ technology and enhance the customer experience through personalized experiences, as well as digitize product operations for fund managers and financial advisers alike.

“Reverence Capital Partners has a long and successful track record as an investor in the independent wealth management community and understands the unique needs of both financial advisers and alternative asset managers,” CAIS founder and Chief Executive Matt Brown said in a statement.

Including a $50 million investment from Eldridge last year, this is the third round of outside capital for CAIS.

Brown said news of that initial investment by Eldridge sparked the interests of other investors. In addition to investing in people and technology, he said the money will be used to finance acquisitions.

“Now we have the ability to look at acquisitions in a very serious way,” Brown said. “We will look at acquisitions in an area that can accelerate our technological development.”

The Mather Group, a registered investment adviser with $8 billion under management, didn’t provide specific details, but announced a “significant strategic investment from The Vistria Group,” which is making its first investment in the wealth management space.

“This partnership is consistent with our long-term thesis about the value of, and tailwinds in, wealth management,” Vistria partner Boris Rapoport said in a prepared statement.

“TMG’s culture of service, innovation, professional development and growth provides a great opportunity to replicate in markets across the U.S.,” he added.

The migration of PE toward wealth management is a relatively new phenomenon that has been quickly gaining steam and driving consolidation.

According to Echelon Partners, PE firms made 38 direct investments in the wealth management industry last year, which compares to 23 in 2020 and 11 in 2019.

Since January 2020, The Mather Group has completed 10 acquisitions; it currently has more than 140 advisers and staff around the country. The firm’s assets have increased to $8 billion from $1 billion five years ago.