Focus Financial replenishes acquisition war chest

With a new $220 million credit facility in hand and with a stamp of approval from a consortium of large banks, Focus Financial Partners LLC is set to continue its string of RIA acquisitions, including wirehouse breakaways. Focus announced this week that it has closed on a $220 million revolving credit facility from banks including Bank of America Corp., BMO Capital Markets Corp., J.P. Morgan Chase & Co., SunTrust Robinson Humphrey, Comerica Inc. and UBS AG. The facility can be increased by $100 million. “It has basically doubled the [borrowing] capacity we had before,” said Rudy Adolf, founder and chief executive of Focus Financial. “It's a stamp of approval from the banks for our business model.” Focus Financial, an aggregator, has operating agreements with 23 independent advisory firms that manage more than $45 billion in total. The company enters into a cash-flow sharing arrangement with the firm, and offers logistical support and operational expertise. Founded in 2006, Focus was initially capitalized with $50 million in private-equity money. “A $45 billion [in assets] business generates a lot of cash, so when we do deals, they are with a combination of cash … plus our lending facilities,” Mr. Adolf said. Focus Financial is especially keen on landing high-end teams from wirehouses. “We're seeing really interesting activity on the breakaway broker front,” Mr. Adolf said. “Versus last year, we see an increase in both the quality and the quantity of teams.” The wirehouses continue to lose market share and some retention deals are expiring this year, making it easer for brokers to move, he noted. Mr. Adolf said “multiple billions” of dollars in assets are in the pipeline from wirehouses, but declined to elaborate. He said the financial package Focus Financial can offer rivals the recruitment deals that successful teams can get from competing wirehouses.