GTCR bets on registered investment advisor growth via CAPTRUST

GTCR is looking to grow CAPTRUST through several M&A deals in 2020 as financial advisers see positive inflows amid the market dislocation, Mike Hollander, managing director at GTCR, told PE Hub.

The Chicago private equity firm announced a minority growth investment in CAPTRUST Financial Advisors on June 2, bringing the firm’s valuation to $1.25 billion. GTCR took a 25 percent stake in CAPTRUST in connection with the deal.

CAPTRUST co-founder and CEO Fielding Miller continues to lead the firm and remains the largest of 380 equity shareholders.

CAPTRUST is an independent registered investment advisor with more than 700 employees nationwide and $390 billion in client assets under advisement, as of March 31.

The financial advisory firm’s differentiated model stems from the fact that it serves a unique set of client groups, including foundations, endowments and high-net-worth family clients, Hollander said.

“They are also the only platform in the space that provides investment management services to institutions through their retirement plans advisory,” he added.

Further, the financial advisory firm has a stronger organic growth engine than the industry as a whole due to its centralized marketing and technology services, Hollander said.

Broadly, the financial advisory space is poised to benefit from market dislocation and financial uncertainty in the US, and GTCR is looking to take advantage of that trend through consolidation.

“CAPTRUST has a very robust M&A pipeline right now; They are talking to both institutional wealth managers and high net-worth RIAs,” Hollander said. “Our expectation is that CAPTRUST will get several M&A deals done in the second half of the year.”

In fact, GTCR considers the financial advisory space to be counter-cyclical as more people turn to trusted financial advisors during the downturn.

“When you go through a period of market dislocation and turmoil, people again want to turn to a trusted advisor. So our perspective is that the RIA market will actually see benefits from some of the increased volatility that we are seeing today,” Hollander said.

CAPTRUST proves this theory.

According to Hollander, CAPTRUST saw positive cash inflows during the first quarter of 2020 when covid-19 began affecting stock markets.

“They are seeing strong interest from clients who are saying ‘I need some help managing my assets,’” Hollander said.

Aside from RIAs, other financial and financial technology companies have shown signs of strong resilience amid the economic slowdown. GTCR remains open for business and continues looking for deal opportunities across the landscape, Hollander said.

Action Item: See GTCR’s latest form ADV here.