Lightyear Capital and the Public Sector Pension Investment Board (PSP Investments), one of Canada’s largest pension investment managers, have signed an agreement to acquire AIG Advisor Group, a subsidiary of American International Group.
Advisor Group is the holding company for a network of independent financial advisors that is among the largest in the United States. The four broker-dealers that comprise Advisor Group include FSC Securities based in Atlanta (www.joinfsc.com), Royal Alliance Associates based in New York (www.royalalliance.com), SagePoint Financial based in Phoenix (www.sagepointfinancial.com), and Woodbury Financial Services based in Minneapolis (www.joinwoodbury.com). The group has 5,200 independent advisors and $160 billion in client assets under administration. Advisor Group is headquartered in New York (www.advisorgroup.com).
At the close of the transaction, Erica McGinnis will continue in her role as Chief Executive Officer of Advisor Group. Valerie Brown, former Chief Executive Officer of Cetera Financial Group, a portfolio company of Lightyear’s second fund, will be joining Advisor Group full-time as Executive Chairman of the Board. Lightyear and PSP will have the majority of the seats on Advisor Group’s Board of Directors.
This is the second time around for Ms. Brown with Lightyear. In 2010, Lightyear acquired three independent broker-dealers from ING which the firm rebranded as Cetera. From 2010 to 2014, with Ms. Brown as Chief Executive Officer, Cetera grew to approximately 6,600 independent financial advisors up from 4,000 at the time of the acquisition, and assets under administration grew to $148 billion from $75 billion. Lightyear sold Cetera to RCS Capital Corporation in January 2014. In an interesting twist, Ms. Brown left Cetera in March 2014 and was replaced by Larry Roth, who came over to Cetera from his position as CEO of AIG’s Advisor Group.
“I’m thrilled to work alongside Lightyear Capital’s team again,” said Ms. Brown. “I am confident Lightyear and PSP will help Advisor Group’s independent advisors thrive in this challenging marketplace. I have known Erica McGinnis for several years and look forward to working with her.”
Lightyear makes control investments in North America-based, middle-market financial services companies. Subsectors of specific interest include asset management, banking, brokerage, financial technology, insurance, and specialty finance. The firm is headquartered in New York (www.lycap.com).
“We see enormous opportunity to grow and expand Advisor Group, and we look forward to working with Valerie Brown and Erica McGinnis, the Advisor Group management team, the PSP Investments team, and the Advisor Group’s high-quality advisor force to grow the company,” said Mark Vassallo, Managing Partner of Lightyear.
“We are pleased with this transaction, which is in line with PSP’s private equity strategy of making sizable, direct investments in high-quality companies alongside experienced partners,” said Guthrie Stewart, Senior Vice President, Global Head of Private Investments at PSP Investments.
PSP Investments is one of Canada’s largest pension investment managers with C$112 billion of assets under management. PSP has been investing in private equity since 2004 and has approximately C$10 billion of assets under management. PSP has offices in Ottawa, Montreal, and New York (www.investpsp.ca).
© 2016 PEPD • Private Equity’s Leading News Magazine • 1-26-16