Carlyle's Global Credit platform has agreed to provide roughly $600 million in hybrid capital to Prime Capital Financial in exchange for a minority ownership stake, a transaction that values the Overland Park, Kansas-based advisory firm at an enterprise value of more than $1.8 billion.
The deal revealed late Thursday effectively amounts to a recapitalizaton as it also marks an exit for Boston-based private equity firm Abry Partners, which first invested in Prime Capital in 2023. According to Abry's own announcement, the firm worked alongside management to expand the company's family office and tax-planning capabilities while helping fund the operational buildout behind its next stage of growth.
Vidur Khatri of Abry Partners said Prime Capital "stood out from the beginning because of the quality of its leadership and differentiated strategy," calling the firm's expansion through acquisitions and advisor recruiting "primed for continued success."
Prime Capital has grown exponentially since Abry's investment, expanding from roughly $2.5 billion in assets under management and seven offices in 2017 to 68 offices and nearly $50 billion in assets today, built through more than 30 acquisitions and the integration of over 50 advisory teams.
Glenn Spencer, the firm's chief executive, said the company has always measured itself by the value created for clients rather than asset totals alone, adding that Carlyle "shares that long-term vision."
Under the new arrangement, Prime Capital's roughly 180 advisor-owners will retain majority employee ownership, and the leadership team and business model will stay unchanged. Gary Jacovino, a partner in Carlyle's Global Credit unit, said the firm was drawn to what he called Prime Capital's "differentiated institution with a distinctive culture, exceptional leadership and a compelling long-term vision."
The transaction, on which Prime Capital and Abry were jointly advised by William Blair, Goldman Sachs, Kirkland & Ellis, Spencer Fane and KPMG, is expected to close before September 15, pending regulatory approval. Carlyle was advised by Debevoise & Plimpton.
The investment extends a run of RIA dealmaking for Carlyle that has accelerated markedly over the past several months. In March, the firm took majority control of Cleveland-based MAI Capital Management in a deal valuing the RIA at more than $2.8 billion. That was Carlyle's first controlling stake in a wealth manager, following an earlier minority position in RIA aggregator CapTrust. As MAI chief executive Rick Buoncore told InvestmentNews at the time, the firm intends to use the new capital to pursue additional acquisitions on the scale of its prior tie-up with Evoke Advisors.
More recently, Carlyle and Bain Capital were reported to be the final bidders competing to acquire Wealth Enhancement, the Minneapolis-based RIA that oversees nearly $160 billion in client assets, in a deal said by people familiar with the matter to be under discussion at a valuation of roughly $7 billion including debt.
That contest, along with the Prime Capital transaction, underscores how aggressively large pools of private capital continue to chase the independent wealth management industry's recurring, fee-based revenue model, even as some dealmakers have grown concerned that the sector may be overinvested.
The Carlyle transaction arrives days after Prime Capital resolved a separate legal dispute. Edelman Financial Engines and Prime Capital have reached a settlement over Edelman's claims of advisor poaching and client data theft, with court filings submitted August 4 in Delaware establishing a joint permanent injunction governing how planners move between the two firms going forward.
The legal battle between the two firms kicked off last November when Edelman sued the Kansas-based firm over what it called a "playbook" to recruit away dozens of financial planners while at the same time extracting confidential information from Edelman.
Under the settlement this week, departing planners must give at least 14 business days' notice and are barred from soliciting former Edelman clients for 12 months after leaving.
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