Emigrant Partners, a private equity subsidiary of New York Private Bank & Trust, has taken on another growth project in the registered investment advisory space. On Wednesday, it completed its minority investment in Verdence Capital Advisors, a wealth management and family office firm based in Baltimore.
Verdence opted for convertible equity, a type of seed financing for young companies, under the advisement of investment bank Park Sutton Advisors.
Leo Kelly, CEO and founder of Verdence, said his firm will use the capital to expand its national brand through acquisitions and invest in its advisor and client-facing technology.
Firm partners did not take any liquidity from the transaction; financial terms of the deal were not disclosed.
Emigrant’s noncontrolling minority stake adds $3 billion in assets under management to Emigrant’s growing portfolio. The PE provider has invested in firms representing approximately $76 billion in total assets under management or advisement.
“Verdence, with its scale, depth and breadth of capabilities, has developed an outstanding platform for M&A and we are excited to begin working with them on strategic opportunities,” said Karl Heckenberg, CEO of Emigrant Partners, in a statement.
Nine-year-old Verdence grew fast enough that its partners recognized it needed to move swiftly for its next phase of growth, which they label "Verdence 2.0." The company is eyeing advisors leaving wirehouses, nearing retirement or looking to grow their businesses with a bigger partner. Alongside the M&A activity, executives will deploy capital to upgrade its technology and investing in its family office services, investment teams and financial planning capabilities.
Verdence is one of three investments Emigrant has made this year. Heckenberg said Emigrant is set to close on a $13 billion AUA firm this week and another later this year.
“We parted ways with two firms and added three firms that have almost $20B in assets,” he said.
Emigrant’s other wealth management firms include a stake in Stratos Wealth Holdings, an RIA that invested in Summit Wealth Partners in June; a minority investment in NorthRock Partners, a Minneapolis-based RIA; and California-based firms Pure Financial Advisors and Parallel Advisors, which it purchased in 2020.
All have grown significantly since working with Emigrant, Heckenberg said. Stratos had $14.5 billion last year and has grown to over $20 billion in assets. NorthRock started with $1.5 billion when it met Emigrant and has doubled its assets to $3.3 billion. Pure Financial Advisors grew from $2.4 billion to $3.3 billion, and Parallel increased its size by nearly a billion to $3.8 billion.
Heckenberg said Emigrant will continue to focus on firms that want to sell up to 30% of the business with the goal of tripling the size of the firm in a five-to-10-year period, he said.