The Carlyle Group has taken a shine to the wealth management industry and acquired a minority stake in a leading registered-investment-advisory firm, Avalon Advisors LLC.
The two companies didn't disclose how much the private-equity giant has invested in Avalon Advisors, which has $3.6 billion in total assets, but the equity for the investment is coming from Carlyle Global Financial Services Partners, a $1.1 billion fund that invests in a variety of financial services companies.
Platform Partners LLC, a private investment firm, also increased its stake in Avalon, according to a statement announcing the deal.
Avalon Advisors ranked No. 23 on the most recent
InvestmentNews list of top fee-only firms ranked by discretionary assets under management, with close to $2.7 billion. (Click on the following link to see
IN's complete list of the largest RIAs.)
There is no doubt that private-equity managers are taking a keen interest in the wealth management industry.
The announcement of the Avalon deal comes little more than a week after Lovell Minnick Partners LLC said that it and the management team of independent broker-dealer First Allied Securities Inc. will buy First Allied from its owner, Advanced Equities Financial Corp.
And last month, The Mutual Fund Store, one of the largest fee-only RIA firms in the industry with $6.4 billion in discretionary assets, said that it was selling a controlling stake in its business to private-equity firm Warburg Pincus LLC.
Robert Gaunt, one of the founding partners of Avalon, didn't return a call seeking comment.
Silver Lane Advisors LLC, an investment bank focusing on the RIA market, advised Avalon Advisors on the transaction.
Erika Cramer, partner and chief operating officer at Silver Lane, said that Carlyle's investment in Avalon Advisors will help the firm expand beyond Houston and Texas. Such “growth capital” could lead to Avalon looking into potential acquisitions in outside markets, she said.
The Carlyle Group has about $153 billion of assets under management in 89 funds and 49 funds of funds.
Carlyle spokeswoman Liz Gill didn't immediately say whether this was the firm's first investment in an RIA.
