A week after Stifel Financial Corp.’s CEO Ron Kruszewski said there was “no need” to sell the wealth management and investment banking firm that he has built, the 67-year-old senior executive took the extraordinary step to quash any speculation about the firm’s future, declaring in a letter Wednesday to employees, staff and advisors no sale was imminent and a report about such a transaction was “ridiculous.”
Regardless, the wealth management industry right now is focused on the future of Stifel and its 2,000 highly desirable financial advisors.
According to interviews this week with a half-dozen senior brokerage industry executives, likely suitors for Stifel could include Raymond James Financial Inc., UBS Group and RBC Wealth Management, the U.S. brokerage arm Canadian banking giant Royal Bank of Canada.
“Let me be clear. Stifel is not being sold to Raymond James or to anyone else,” Kruszewski wrote in response to a report Wednesday from WealthManagement.com about the firm’s recent legal problems with former star broker Chuck Roberts and what that meant for its future.
“I know the folks at Raymond James,” Kruszewski noted. “They’re a nice company, but let’s be honest, I believe Stifel is number one. We have the best business model, the best culture, and the best team on the Street.”
“Most times I wouldn’t even dignify the rumor mill or take the time to respond, but maybe today I’m in the mood to have a little fun,” he added.
“Any reporting about a theoretical sale of Stifel is not only unfounded, but also reckless and defamatory,” Kruszewski added in an email Thursday morning to InvestmentNews.
RBC is looking to gain market share in the highly competitive U.S. wealth management market, several executives said, and needs an acquisition to do so. UBS is also looking to build in the United States.
Raymond James, meanwhile, finished second to LPL Financial Holdings Inc. in its $2.7 billion all-cash purchase earlier this year of Commonwealth Financial Network, executives noted, and is likely in the hunt for another deal.
None of the executives who spoke privately to InvestmentNews about Stifel had direct knowledge of an imminent purchase for Stifel.
The valuations for wealth management properties have never been higher, as private equity investors and others seek to own the healthy cash flows and profits kicked off annually by firms like Stifel that charge a fee on clients’ assets.
The price tag would be hefty. Stifel’s current market capitalization is $12.2 billion and its shares were trading Thursday morning at $119.64, or $1.33 less than its recent share price high that it reached on Tuesday.
“We see no need to sell other than maybe the short-term pop in a share price, which then eliminates a 135-year-old firm and a firm that's gaining market share as we have over the years,” Kruszewski said on October 22 in response to a question from an analyst during a call last Wednesday to discuss third quarter earnings.
A UBS spokesperson declined to comment. Spokespeople for Raymond James and RBC Wealth Management did not return messages Thursday morning to comment.
A few days after those Kruszewski’s comments to analysts, Stifel said it was selling its independent broker-dealer business to Equitable for an undisclosed price. Stifel’s independent broker-dealer was relatively small, but the move could signal the firm’s desire to tighten up its operations before selling the entire firm to another suitor, executives said.
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