Joe Duran’s Rise venture secures $250 million PE backing

Joe Duran, executive managing partner at Rise Growth Partners.

Industry pioneer says there's already a ‘massive desire’ – and a $220 billion pipeline – for firm's plan to help fuel the next generation of RIAs.

Joe Duran’s wealth industry comeback gathered significant pace with the announcement that his new venture, Rise Growth Partners, has secured a $250 million commitment from Charlesbank Capital Partners.

Rise already planted its flag in the ground as the industry’s “first synergistic financial partner for growth-oriented RIAs” when Duran revealed his vision at last year’s Future Proof festival. Now, the man renowned for creating nationwide RIA United Capital, which was later acquired by Goldman Sachs for $750 million, has the additional funding he needs to embark on his next mission – to fuel the next generation of RIAs.

Duran will deliver the opening keynote speech at the InvestmentNews RIA Connect New York event on April 16. Full agenda and registration can be found through these links, which also detail the special advisor rate.

Rise will seek to acquire significant minority stakes in select RIA firms and then provide them not only with growth capital but also hands-on operational guidance and acquisition expertise to help them become national enterprises.

Duran told InvestmentNews that within three weeks of Future Proof, Rise had more than $100 billion in the pipeline, primarily $2 billion to $5 billion firms. “They are run already by a CEO who’s already done several acquisitions or grown organically, and has visions of getting a lot bigger. The nature of our offer attracted a very specific kind of advisor – they were not lifestyle people; they were real business builders. There’s massive desire [for our offering].”

That pipeline now sits at $220 billion – with about $97 billion representing active discussions with 33 firms. The rest is early stage “vetting and curating.” The majority of these firms would be sub-acquisitions with an eye on their eventually joining one of the select group of platform firms Rise plans to acquire.

“We want to do six platform-firm acquisitions – firms that we think have the leadership, the platform, and the growth strategy to quintuple in size over the next three to five years,” Duran said. “A lot of the sub-acquisitions, those folks we are talking to, can join them because most of the wealth is built in that voyage from $3 billion to $25 billion.”

The funding from Charlesbank, a middle-market private investment firm, comes in addition to capital provided by Rise’s management. In addition to executive managing partner Duran, the team consists of Darius Mirshahzadeh, executive managing partner; Terri Kallsen, managing partner and operating partner; Brian Shenson, managing partner and chief operating officer; and managing partners Mike Mirshahzadeh, Dan Newhall and Phil Jacobson.

Duran expects plenty of copycats, but while being the first of its kind is important, there is one part of Rise’s offering he believes will prove difficult to replicate – expertise. “Executing requires people like me and Terri, and there aren’t a lot of us floating around because it’s a nascent industry still. A lot of people who’ve actually built funds with tens of billions are still running them.

“The expertise we bring to the table is to say, ‘Look, you’ve never run anything as big as you’re running today and we’re going to help you avoid the blind alleys and the mistakes, and when you confront something will have been there and we can help you navigate your way through.”

THE FUTURE

The bet Duran is making is that five years from now, the US will have several trillion-dollar RIAs that will need to do acquisitions to grow. Firms that are $2 billion won’t move the needle, so they will need deals of $20 billion to $30 billion. It’s what he highlights as phase three of the consolidation of the industry – the battle for market share.

“If we are building that next generation of firm, they are then big enough that they can either get a large private equity firm to take them from $30 [billion] to $200 billion and make lots of money. Or they can sell it to a strategic [buyer] and do really well,” he said. “That’s where this industry is going to be over the next five years. If we pick the right horses, those are the ones that will be the next $30 billion firms and we will do really well economically.”

Rise’s management will co-invest in every transaction they do, and their reward is aligned with the equity appreciation for the underlying advisors.

“We have been thoroughly impressed with the Rise management team and their vision to become the preeminent growth accelerator in the wealth management industry,” said David Katz, managing director at Charlesbank. “Rise offers a unique value proposition grounded in the leadership team’s extensive industry and growth experience, its partnership culture, and its differentiated investment process. We are very much looking forward to supporting them as they help emerging, growth-minded wealth management firms reach the next level.”

The InvestmentNews RIA Connect New York event will take place on April 16. Full agenda and registration can be found through these links, which also detail the special advisor rate.