RCAP Holdings LLC, a holding company managed by Nicholas S. Schorsch and a team of managers, is acquiring First Allied Holdings Inc., an independent broker-dealer, RCAP announced Wednesday.

First Allied, together with The Legend Group, serves over $32 billion in assets across 300,000 clients, 1,500 independent financial advisors and 500 branches in the United States. The deal is the latest in a series of acquisitions and mergers by firms controlled by Schorsch, who is an active player in the real estate investment trust business.

Following this transaction, First Allied, The Legend Group and their subsidiaries will continue to operate autonomously under their current management structure and respective brands as part of RCAP Holdings.

The transaction with RCAP Holdings, based in New York, will provide significant financial resources to First Allied, based in San Diego, to make substantial investments in technology, add professionals and support personnel, expand its 401(k) and 403(b) platforms, and enhance advisor marketing and lead generation programs, RCAP says.

The terms of the acquisition were not released but Schorsch, CEO and chairman of RCAP Holdings, says RCAP has committed $200 million to the purchase and growth of the company. That investment is only the beginning, according to Schorsch, who says he plans to invest more in the future towards the growth of First Allied.

 

The acquisition was purely an investment for RCAP and not a move to gain more distribution outlets for the RCAP nontraded REITs, Schorsch says.

 

”It is a great time to invest, with interest rates low, and First Allied is a first rate company. It is one of the top five broker-dealers in the country, excluding LPL and Ameriprise, which are public companies now. We already have a wholesale broker-dealer and we wanted a retail one that deals with the mass affluent, those with $1 million to $2 million in assets,” Schorsch says.

 

RCAP has no plans to operate First Allied. “No change is needed in the brand or the leadership of First Allied,” he adds.

 

Schorsch describes RCAP as a company that is on the move and says more acquisitions or mergers are planned for the future as the firm continues to diversify its investments. He says he is currently looking at the fund space, as well as others.

First Allied's core value centers around driving advisor efficiency and productivity, which has resulted in the company being a perennial leader in average advisor production, RCAP says.  The transaction fulfills the longstanding aspiration of RCAP Holdings and its family of companies, currently with over $10 billion in assets under management, to expand its presence in the independent financial advisor segment of the financial services industry, according to RCAP.

“The acquisition of First Allied gives RCAP Holdings a top-notch management team, in our view, one of the premier independent teams in the industry," adds Schorsch. "Our value-add to First Allied is in being the best financial partner we can be, while providing strategic insights and direction where we can be helpful.”

First Allied will continue to be led by Adam Antoniades, CEO and president.  “Our affiliated advisors will benefit from immediate access to a well-capitalized platform tailored to provide the mass affluent, emerging high-net-worth and retirement-focused investors with the next generation of industry-leading investment solutions focused on durable income and principal preservation,” Antoniades says.

 

RCAP will buy the majority interest in First Allied that was held by Lovell Minnick Partners, a private equity firm focused on the financial services industry. In addition to Schorsch, the management team at RCAP is made up of William Kahane, Michael Weil, Peter Budko and Brian Block.

 

Weil says the transaction will allow RCAP “to directly reach the individual investor through First Allied’s extensive network of independent financial advisors.”

 

This is not the first major announcement for Schorsch in recent months. American Realty Capital Properties Inc., a real estate investment trust controlled by Schorsch, earlier this month announced a merger agreement with a traded REIT, CapLease Inc. Also in June American Capital Trust IV Inc., another of Schorsch’s companies, agreed to buy 986 retail properties from General Electric Co.’s finance arm to bring the REIT’s holdings to 1,326 properties.

 

In March, American Realty Capital Properties merged with the similarly-named but unrelated American Realty capital Trust III Inc. American Realty Capital Trust, a nontraded REIT, specialized in long-term leases while American Realty Capital Properties specialized in short and mid-term leases. American Realy Capital Properties is a sister company to RCAP with the same owners but no financial connection.