Nicholas Schorsch's RCS Capital Corp. (RCAP) is continuing its buying spree with a $1.15 billion deal to buy Cetera Financial Group, an independent broker-dealer headquartered in El Segundo, Calif.
RCAP announced today it has entered an agreement to buy Cetera from private-equity firm Lightyear Capital for $1.15 billion in cash. Cetera is the third broker-dealer that RCAP has scooped up recently. It will become part of RCAP's retail advice platforms, along with Summit Brokerage Services and Investors Capital Holdings.
Valerie Brown, Cetera's president and CEO, and her management team will continue to operate Cetera's brands.
Schorsch, RCAP's chairman, says the company intends to become the most important full-service financial services and securities distribution company in the industry by continously executing strategies through its transaction management group."Furthermore, it is our plan to rapidly build out our footprint across America in one seamless step with our family of independently operated retail firms, led by Cetera,” he said.
RCAP's CEO, William M. Kahane, said the Cetera deal immediately provides scale, enables the firm to diversify its revenue streams and position its securities sales business to attract best-of-class third-party sponsors, and mitigate concentration risk among its retail firms.
"It adds substantially to our assets under administration, and makes our overall enterprise uniquely attractive to other retail advice firms who believe they could benefit by aligning themselves with a dominant, well capitalized, public firm with a complete understanding of the industry and a demonstrated commitment to excellence,” he said.
Cetera was formed in 2010 following the sale of three ING broker-dealers and includes four B-D platforms: Cetera Advisors, Cetera Advisor Networks, Cetera Financial Institutions and Cetera Financial Specialists. The company has approximately 6,660 registered representatives across the United States.
RCAP's buying spree has been nothing short of extraordinary, and has included more than broker-dealers. In October, American Realty Capital Properties agreed to buy Cole Real Estate Properties for $6.85 billion. In September, RCAP announced it was buying alternative investments firm Hatteras Funds Group and finalized its acquisition of First Allied Holdings, a San Diego-based broker-dealer.
Not since Eli Broad of SunAmerica embarked on an acquisition spree of independent brokerages in the 1990s has the industry wtinessed this pace of consolidation. SunAmerica acquired Royal Alliance, Anchor National FSC Securities, Keogler Morgan, and Advantage Capital among other firms. Broad eventually sold the business to AIG for $16.5 billion and those firms today form the AIG broker-dealer network. Borad himself is now the leading philanthropist in Los Angeles.
Broad's success prompted other financial services giants, most notably ING, to enter the independent brokerage space. ING acquired Financial Network Investment Corp. in El Segundo and Multi-Financial Securities. Both firms were rechristened into separate Cetera divisions after it was acquired by Lightyear Capital in late 2009.