Independent broker-dealer Kestra Financial on Monday announced that it will sell a majority stake in the firm to Warburg Pincus, a leading global private equity firm.
Stone Point Capital of Greenwich, Conn., Kestra’s majority owner, will maintain a minority stake in the company, while Kestra’s management team will retain equity positions in the company, according to a news release. A number of Kestra advisors are also expected to retain equity positions, the release said.
“We’re excited to continue building an industry-leading wealth management organization. The independent advisor community has been responsive to our evolution and we are fortunate to serve the best,” said James Poer, CEO of Austin, Texas-based Kestra. “Our new relationship with Warburg Pincus, and continued relationship with Stone Point, will allow us to continue building on the shared success we have achieved.”
Warburg Pincus, headquartered in New York City, has over 50 years of private equity experience, having invested more than $73 billion in 855 companies worldwide. It has a storied history in private equity and has often taken control of private companies with the goal of taking them public down the road.
The deal is expected to close during the second or early third quarter of this year, and there will be no impact to Kestra’s employees and advisors associated with this transition, including no repapering requirement for advisors’ clients, the release said.
Recently, Kestra Investment Services LLC, a subsidiary of Kestra Financial, agreed to a fine of $225,000 and other penalties by Finra for overcharging clients $1.6 million in mutual fund fees between 2009 and 2018, Finra said.
The fund overcharges impacted about 3,205 clients over the nine-year period; Kestra agreed as part of the agreement to repay the customers, with interest, for total compensation of about $1.9 million, according to Finra.
The complaint was filed after Finra discovered that Kestra failed to apply mutual fund fee waivers to eligible clients, Finra said.