Private equity firm Stone Point Capital has taken a majority stake in wealth management firm Kestra Holdings, replacing investment firm Warburg Pincus as controlling owner, the firm said in a press release. The recapitalization announced today not the first time Stone Point has invested in Austin, Texas-based Kestra Holdings.
Stone Point, based in Greenwich, Conn., originally invested in the company in 2016 when it spun out from NFP, eventually selling its minority stake to Oak Hill Capital in 2022. However, Oak Hill will remain a minority owner of Kestra, according to the press release. Warburg Pincus acquired its majority stake in Kestra in 2019.
However, Kestra has grown into a different firm from the pure broker-dealer it was five years ago. After it was spun out NFP, Kestra created Bluespring, an acquirer of RIA firms looking for succession solutions and resources to grow.
“The Kestra Holdings management team and a large number of Kestra-affiliated financial advisors and Bluespring-affiliated principals will retain equity positions in the company,” the release said. “Bluespring Wealth Partners is the acquisition arm of Kestra Holdings.”
The investment, which is expected to close in the first quarter of 2025, should lead to accelerated growth for the company, Kestra said.
Kestra Holdings said in June that its companies collectively oversee about $111 billion in assets and support more than 2,300 independent financial professionals across the nation. In Financial Advisor’s annual IBD survey, Kestra reported $719.6 million in revenues. Its revenue per rep was $560,453, significantly above the industry average.
“Kestra Holdings’ recapitalization will provide additional fuel to an already robust growth engine, which includes industry-leading recruiting, a powerful service and technology platform, and a high-growth wealth management acquisition business,” the company said. “Kestra will remain focused on serving independent financial advisors by expanding its unique wealth management offerings in Kestra Financial and Kestra Private Wealth Services, as well as accelerating its acquisition of premium wealth management firms through Bluespring Wealth Partners.”
Stone Point decision to invest again in Kestra’s underscores the growing role private equity is playing in the advisory space and the familiarity and knowledge base many PE firms are developing in the space. “The firm’s return as majority shareholder represents a strong vote of confidence in the management team, its mission and financial services platform,” Kestra said in the release.
Stone Point, which has a seven-member senior management team overseeing 80 investment professionals, has over 25 years of private equity experience, having raised more than $35 billion in aggregate capital commitments to invest in more than 160 companies, according to the release.
“Stone Point’s expertise and partnership previously helped propel us along a successful path to establishing our unique value proposition – to support successful wealth management businesses with full and deep value while focusing on the life cycle of their entrepreneurial efforts,” Kestra CEO James Poer said in a prepared statement. “Today, our priorities are to strengthen that value proposition as we continue building a destination of choice for independent, successful wealth management businesses and professionals.”
Fayez Muhtadie, co-head of private equity at Stone Point, said in a statement, “We are thrilled to partner once again with James and the Kestra management team. We believe Kestra is a highly differentiated platform in the independent wealth management space and are excited to continue to strengthen Kestra’s value proposition and propel growth for the financial advisors it serves.”
Kestra Holdings is the parent company of Arden Trust Company, Bluespring Wealth Partners, Kestra Investment Services, Kestra Investment Management, Kestra Advisory Services, Kestra Private Wealth Service and Kestra Institutional Services.
