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New CFO Signals No Near-Term Sale For Envestnet

Former iShares managing director Josh Warren to replace long-tenured Pete D’Arrigo as finance chief at Envestnet.

Former iShares Managing Director Josh Warren will replace long-tenured Pete D’Arrigo as finance chief of the publicly traded TAMP, the company announced Tuesday.

Warren will officially step into the role on Nov. 15. Prior to his tenure at iShares, Warren was managing director in BlackRock’s Corporate Strategy and Development team, where he was involved in that firm’s 2018 investment in Envestnet. Blackrock paid $123 million for a 4.9% stake in the company.

The move signals to at least one equity analyst that Envestnet, long thought to be an acquisition target by a larger financial services firm or private equity investor, will not be moving forward on any such deal.

Devin Ryan, an equity analyst with JMP Securities, wrote in a note to clients Tuesday that the move signals “Envestnet is not proactively making moves to sell the company.”

Rumors that Envestnet was an acquisition target have circulated frequently in the media, particularly in early 2020 and early 2022, Ryan points out. One publication last year cited offers on the table in the range of $90 to $100 a share. In both time periods, no deal was announced.

Envestnet currently trades around $46 a share.

Partly a response to activist shareholder Impactive Capital, which acquired a 7.5% stake in the company and two board seats in 2022, the company has focused on increasing margins, reducing its headcount, cutting real estate costs by closing its Chicago office and relocating to Berwyn, Penn., and trimming its marketing budget by 33%, according to its most recent earning’s report.

In addition, Ryan points out, the firm’s foray into a custodial partnership with global financial services firm FNZ has “set it up for success around growth in the future.”

Still, he said he would not be surprised to see private equity take another look at the firm, given the stock is trading at about half the value it was when acquisition rumors were high, even as client asset levels have rebounded to similar levels.

“We believe management feels good about a number of steps the company has taken and how it is positioned going forward,” he wrote.

TAGS: Technology
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