Seattle-based Freestone Capital Management, a wealth management firm with roughly $2 billion in assets, today announced it got a $40 million investment from The Sienna Group, a private investment company in Seattle. For Freestone, which is one of the country's 30 largest independent wealth management firms, the money will help launch its expansion along the west coast. For Sienna, whose founder is a former Starbucks executive, the deal helps it expand its presence in the profitable financial advisory industry.
"We've been successful," says Freestone founder and chief investment officer Gary Furukawa, "but we figured we could be more successful if we had the right arrangement." Started in 1999, Freestone has 750 clients and prides itself on its in-house investment team that emphasizes alternative investments, such as its large fund-of-funds business.
Sienna was founded in 2003, and its stake in Freestone gives it five holdings in the areas of retail, business services, real estate, and financial services. Freestone had been looking for the right partner, but was turned off by various large national financial services and holding companies it spoke with. The Freestone and Sienna principals didn't know each other personally, but knew of each of other through Seattle business circles, and when the two finally met both sides said a deal came together quickly because they have the same business goals and cultural fit when it comes to building long-term, sustainable business models. They also bring to the table complementary assets to help both entities expand their operations.
"Getting access to Sienna's private equity and real estate resources will augment what we can do for our clients," says Erik Morgan, Freestone's president and director of private-client services.
Freestone also liked that Sienna respects its business model. "They're not interested in changing much of anything," Furukawa says. "That made them an attractive partner for us." Freestone's management team will remain intact.
"The economics of this [financial services] industry is attractive," says Scott Svenson, founder and managing partner of The Sienna Group, "and Freestone has the nucleus and elements in place to create something special."
In 1994, Svenson and his wife founded Seattle Coffee Company when they were living in London. The U.K.-based chain was bought by Starbucks in 1998, and Svenson was president of Starbucks' European operations for two years.
Svenson says the deal with Freestone, expected to close during the first quarter, will create opportunities for its core personnel to increase their ownership stakes over time. Meanwhile, Furukawa becomes a shareholder and partner at Sienna, will sit on its board and will help build out its financial services business.
Furukawa expects to open a second west coast office this year and will pursue other expansion opportunities for Freestone in the future in potential markets including southern California, the Bay Area, Portland and Seattle.