Focus Financial Quietly Prepares for Possible IPO
Focus Financial Partners, which provides financial backing and support services to breakaway RIAs, has filed confidentially for an initial public offering, the Wall Street Journal reports.
Firms are allowed to file confidentially for listing on U.S. exchanges when their annual revenues are under $1 billion, and Focus Financial’s revenue was close to $400 million, according to a press release earlier this month, the Journal writes. But the IPO could value the company at $1 billion, people familiar with the matter tell the Journal.
Focus Financial, which helps breakaway teams as well as already-independent practices with tech and trading platform support and compliance services, offers advisors cash and equity in the firm for a stake in their earnings, the paper writes.
The company’s backers include venture capital firms and Centerbridge Partners, the private equity firm that invested $216 million in Focus Financial in 2013, according to the Journal. Its main competitors are HighTower and Dynasty Financial Partners, which both operate on slightly different models in regard to equity stakes and support, the paper writes.
Focus Financial is striking out for a public listing in uncertain times: first-time offerings totaled $12.8 billion last year, the lowest since 2009, according to Dealogic data cited by the Journal. But the news also comes at a time when financial advisors at big brokerages such as Morgan Stanley, Merrill Lynch and UBS are increasingly striking out on their own, according to the paper.
The number of independent advisors has grown from 36,000 in 2007 to 47,000 in 2014, and is projected to reach 51,000 by 2017, while the number of advisors at big brokerages is expected to shrink from 48,000 in 2014 to 41,000 next year, according to Cerulli Associates data cited by the Journal.