Cetera auction draws interest from Lightyear, GTCR, Lovell Minnick, others

Private equity is in the hunt for Cetera Financial Group, the network of broker dealers that’s up for sale, four sources said.

Goldman Sachs is advising on the process, people said. Cetera, El Segundo, California, is seeking $1.5 billion to $2 billion, sources said.

The expected auction has drawn a mix of private equity and strategics.

Lightyear Capital, the financial services-focused PE firm that once owned Cetera, is interested, sources said. Lovell Minnick Partners, which has invested in other broker-dealers, is also in the hunt, as well as Reverence Capital Partners and GTCR, sources said. Ameriprise Financial and LPL Financial are also interested, sources said.

Lightyear, Lovell Minnick and Reverence would need to partner with a larger PE firm, or co-investor, to bid, sources said. This could include a Canadian pension fund. Lightyear in 2016 partnered with Canada’s Public Sector Pension Investment Board to buy Advisor Group from AIG. Lightyear, if successful, is expected to combine Cetera with Advisor Group.

The auction has yet to officially begin, three of the sources said. Instead, Cetera is holding “informal advance discussions” as bankers prepare offering material, one person said. NDAs are just being signed and books are expected to go out in early April, sources said.

Bloomberg reported last month that Cetera was exploring a sale.

Cetera was created in 2010 after Lightyear acquired ING Advisors Network and three of its broker dealers. It renamed the business Cetera. The PE firm then sold Cetera in 2014 for $1.15 billion to RCS Capital Corp, Buyouts reported.

(Lovell Minnick, for its part, also has roots with Cetera. It sold First Allied to RCAP in 2013. First Allied is now part of Cetera.)

Two years later, in January 2016, Cetera’s parent, RCS Capital Corp, filed for Chapter 11 bankruptcy protection. RCS emerged from bankruptcy in 2016. Cetera is currently owned by its former lenders, which include Fortress Investment Group and Carlyle Investment Management, press reports said.

Eaton Vance was also a lender. Cetera is owned by Eaton Vance’s institutional floating-rate loan strategy and retail floating-rate mutual funds, a spokeswoman said

Cetera is now composed of six broker-dealers: Summit Brokerage Services Inc; Cetera Advisors; First Allied; Cetera Advisor Networks; Cetera Financial Specialists and Cetera Financial Institutions. The firms together have nearly 8,000 brokers and financial advisers, InvestmentNews said.

Goldman, Lovell, Eaton Vance and Carlyle declined comment. Executives for Fortress, Lightyear, GTCR and Cetera could not immediately be reached for comment.

Action Item: Contact Cetera CEO Robert Moore at +1 866-489-3100

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