The RIA industry has become ripe with aggregators backed by private equity firms who mainatin high-profile investments across sports and enterainment. A leading example is Arax Investment Partners, whose private equity backer RedBird Capital Partners has investments ranging from MLB’s Boston Red Sox to European soccer giants Liverpool FC and AC Milan, as well as LeBron James’s Hollywood studio and the new parent company of CBS.
“The creation of wealth from sports and media investing, and the creation of wealth that comes with the consumption of those businesses by Americans and people globally, is one that has enhanced the need for wealth management and human advice from a financial services standpoint,” Arax Investment Partners CEO Haig Ariyan told InvestmentNews. “So it's very much a self-fulfilling ecosystem for us.”
Ariyan was the CEO of investment bank Alex. Brown before he founded Arax in 2022 with funding from RedBird. Arax has three RIA divisions that account for over $30 billion in client assets: Ashton Thomas Private Wealth, US Capital Wealth, and Arax Advisory Partners. Ashton Thomas has been snapping up advisors across the country most recently expanded into Hawaii, while US Capital Wealth focuses on the Texas market, and Arax Advisory Partners caters a tuck-in strategy for advisors who want to work as 1099 independent contractors.
“We kind of view Arax as the nexus of independence and partnership for financial advisors,” said Ariyan. “You're able to partner with us on either a W-2 basis where we actually value your practice as an asset and bring you onboard to one of our three firms as a partner of the firm, or we have the ability to provide supported independence [via] lift out financial advisors and set you up independently as a 1099 with your own firm in affiliation with Arax Investment Partners. We only do majority stakes, we don't do minority stakes.”
Bankrolling it all for Arax is Gerry Cardinale’s private equity firm RedBird Capital Partners, which manages $12 billion for investors. Its portfolio spans Fenway Sports Group, The SpringHill Company founded by James, Skydance Media, Alpine Racing F1, the United Football League, athlete licensing firm OneTeam Partners, and the YES Network.
“RedBird's pedigree investing in sports and media has been thematically an important part of what we're building,” said Ariyan. “We launched an athlete family office in partnership with a retired Major League Baseball player. We also have built a practice that's thematically focused on entertainers and athletes, and have a number of small investments we've made specifically in that space.”
Other private equity firms intersecting between the financial advisor market and sports include TPG, which has stakes in leading RIA aggregators Creative Planning and Homrich Berg. In May, TPG launched its own sports investing business in partnership with golfer Rory McIlroy. Sixth Street Partners is an investor in Wealthbox and the serial RIA investor Merchant, while maintaining stakes in teams such as the San Francisco Giants, Bay FC, San Antonio Spurs, and FC Barcelona. The new owner of the Boston Celtics is Symphony Technology Group, which bought financial data aggregator Yodlee from Envestnet in June.
“These athletes and entertainers, they are clients just like everyone else. So they need financial plans, they need estate plans, and they need advice,” said Ariyan. “It's been very gratifying for us to provide genuine [services] to athletes and entertainers that we've met through the RedBird ecosystem and help solve problems for them where others have often tried to take advantage. It's been a differentiator for us.”
On top of inorganic growth through M&A, Arax has a “high single-digit growth rate” across its three divisions described by Ariyan as “an industry leading organic growth rate." Arax’s team of eight chief growth officers aid advisors with AI and data science tools to support growth, which is an initiative RedBird says it is driving.
“RedBird helps lead sourcing, diligence, and executing all M&A activity at Arax. Since we formed our partnership with Haig [Ariyan], the Company has evaluated over 100 strategic opportunities and closed 11 acquisitions, growing from zero AUM to $19 billion in AUM/A and $50 million of EBITDA, making Arax one of the fastest growing wealth management platforms in the U.S,” reads a description on RedBird’s website. “RedBird is also driving integration efforts across the platform, and leading AI and data science initiatives across the Company.”
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