Tiedemann-led RIA SPAC sets sizable growth targets

Two registered investment advisers and a special purpose acquisition company said this week they were combining in an highly unusual transaction to create a new company that will be listed on the Nasdaq Inc., Alvarium Tiedemann Holdings, that has aggressive growth targets for assets and earnings.

On the RIA side, the proposed combination, which is expected to close by March, is the merger of the Tiedemann Group, a New York-based investment and wealth management firm, and Alvarium Investments Limited, a London wealth management and investment firm with global reach and an RIA in Miami.

On Monday, those two firms said they had entered into an agreement to combine with Cartesian Growth Corp., the SPAC. Known as blank check companies, SPACs have been an investment darling of the Covid-19 pandemic.

While RIAs have been combining at a furious pace, public listings remain rare, with the 2018 initial public offering of Focus Financial Inc., a long-established RIA aggregator, standing out.

And Alvarium Tiedemann Holdings has high expectations for the new venture, in which the overwhelming majority of current partners will be shareholders. The new enterprise expects to have a public value of almost $1.4 billion.

According to an investor presentation outlining the deal, the new venture expects to have more than $100 billion in client assets by 2026 as compared to $54 billion at the end of last year.

It also expects to see an operating profit margin, based on EBITDA, or earnings before interest, taxes, depreciation and amortization, of 40% or more, according to the presentation. On a pro forma basis, EBITDA for the enterprise in 2020 was 29%, according to the presentation.

"About growth, good luck, everybody wants to grow," said Danny Sarch, a longtime industry recruiter. "But everybody is bidding on the other RIAs out there and not everybody is going to win. And the market is at an all-time high. Margins are high, but let's wait and see if you can make them higher."

Tiedemann's CEO Michael Tiedemann will lead the new firm, which will have offices in the U.S. and around the globe, focus on very wealthy clients and offer ESG investments. In an interview Wednesday, Tiedemann said the growth targets for assets and earnings were within reach, with assets growing typically at 10% a year.

"It's simply the law of compounding, and portions of the business, like real estate and merchant banking and advisory, have opportunities for margin expansion," he said. "The non-U.S. growth opportunities for the independent RIA model of wealth management are significant. Banks still dominate in those markets."

Institutional investors, as well as strategic partners from Tiedemann and Alvarium, have committed to purchase approximately $165 million of shares of common stock of Cartesian Growth Corp. in a private investment in public equity, also known as PIPE. The ticker symbol will be GLBL.