The deal is expected to close during the second or early third quarter of this year. Stone Point is to retain a minority stake in Kestra.
Terms of the deal were not disclosed.
Kestra Financial is currently majority owned by Stone Point Capital, with insurance firms National Financial Partners and Securian Financial, Kestra’s management team and around 60 advisors as minority owners.
It is headquartered in Austin, Texas, serves 2,300 advisors and has $93 billion in assets under administration, as of December 31 2018.
When the deal closes, NFP and Securian Financial will no longer have a stake in Kestra, according to James Poer, chief executive of Kestra Financial.
Kestra’s executive team will stay intact and financial advisors who are invested will have the opportunity to reinvest, according to Poer.
He added there should be no impact to the firm's employees and advisors as a result of the deal.
Warburg Pincus was founded in 1966 and has 17 private equity funds, which have invested over $73 billion in 855 companies across the globe.
‘They [Warburg] are a world class private equity organization, which brings a depth of resources and expertise that we will have at our finger tips in order to realize our business strategy,’ Poer said.
‘There’s a misconception about private equity that they buy you and then tell you what they’re going to do with your company. But that’s really not what this is. They’re buying into the strategy that this management team has laid out and they bring capital and additional expertise in to help super power that execution.’
Stone Point, which is based in Greenwich, Connecticut, originally acquired its stake in Kestra from NFP in June 2016. NFP retained a minority stake at the time.
Kestra acquired broker-dealer H. Beck from Securian Financial in December 2017 and as part of the deal, Securian made a minority investment in Kestra.
In regards to whether the Warburg deal will pave the way for an IPO, Poer said:
‘We believe, at this moment the ideal capital structure for this business is to be a privately held company. When we look out to our future, it’s more around what the ideal capital structure is to build the right value stack rather than trying to rush to some sort of new capital structure like an IPO.’
‘We want the optimal capital structure for where we are in our trajectory and that may or may not ever be an IPO.’
