Warburg Pincus a private equity firm has decided to acquire some stake in Edelman Financial Engines, appraising US Investment Advisory Service Provider for $ 7.3 Billion Including Debt, companies told Reuters on Sunday.
The deal represents a 62% increase in the valuation of Edelman Financial Engine from 2018 when buyout firm Hellman & Freedman made it through a merger of the two companies. This Registered Investment Advisor (RIA) underscores the growth of the industry as more Americans seek professional help to invest their savings.
The companies said Hellman & Freedman would retain a majority stake in Edelman Financial Engine. They did not disclose the exact stake that Warburg Pincus was acquiring, but Michael Martin, the private equity firm’s head of financial services, said in an interview that it represented “mid-to-high adolescent” percentage equity ownership.
Martin said, “We always like a business, and we would have liked when the company was taken private (in 2018). When this opportunity came our way, we were happy to be able to pursue it.” The Edelman Financial Engines serve their services to around 1.3 million customers across 150 offices in America and hold over $260 billion in assets under management.
The company’s chief executive, Larry Raffone, said in an interview, Warburg Pincus Investments will support Edelman Financial Engine’s goals to expand its 401 (k) business, grow its digital platform, and lure new customers to its brand. He said that the company’s customer base would increase significantly as the older generation seeks professional financial advice for their retirement.
Raffone said, “Planners are essential to the client experience, but they have to be supported by very good technology, so we’re investing dramatically in our digital platform”.
Hellman and Freedman acquired a large stake in Edelman Financial in 2015 from buyout firm Lee Equity Partners, which valued the company at more than $ 800 million, including debt. In 2018, Hellman & Freedman took private company Financial Engine into another company in a $ 3 billion deal and merged with Edelman Financial. At that time the combined company was valued at $ 4.5 billion.
Warburg Pincus had a stake in Financial Engine, but Helman and Freedman sold it on the stock market before acquiring the acquisition. Moelis & Co, along with PJT Partners and Simpson Thatcher and Bartlett, were key advisors to Edelman Financial Engines, which also provided related financial and legal advice. Warburg Pincus was advised by the law firm Wachtel, Lipton, Rosen, and Katz.
