Warburg Pincus Intended to Acquire Kestra Financial

by Haimantee Ghosh February 18, 2019

According to two industry sources, among the private equity managers, Warburg Pincus is interested to acquire Kestra Financial.  For the independent broker-dealer, this week bids were due, and a sale could be declared within the next few weeks, according to the anonymous sources, who did not to be recognized.

According to the report, Kestra was on the block in December. The firm is being estimated at between $600 million and $800million, which is about eight to 10 times Kestra’s EBITDA, or earnings before taxes, interest, depreciation, and amortization.

In 2017, Kestra Financial was ranked the 15th largest independent broker-dealer in the industry, while counting total revenue, according to InvestmentNews data. Kestra reported $475.4 million in total revenue for the year, along with 1,876 registered reps and financial advisers. The asset of the firm under management were $75.8 billion at the time.

Previously, Kestra Financial was known as NFP Advisors while it was owned by insurance brokerage and consultant NFP Crop. The broker-dealer was sold in 2016 to private equity shop Stone Point Capital, which bought a majority stake at the time and changes its name to Kestra.

Stone Point is interested to keep some equity position in Kestra, according to the sources. The CEO of Kestra, James Poer did not return an invitation seeking comment. A representative for Warburg Pincus, Kerrie Cohen, refused to comment.

Warburg Pincus has $43 billion in private equity investments under management, and 180 companies in its portfolio. According to the website of the firm, past investments in the financial services sector include Yodlee and The Mutual Fund Store.

The other bidders interested in Kestra are also private equity shops, according to sources. Private equity investors have exhibited a continuing interest in purchasing buy independent broker-dealers and registered investment advisers.

Genstar Capital, which paid $1.7 billion for Cetera Financial and sponsored the majority of what with junk bonds, is one of the most remarkable.

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