PE-backed Focus Financial set to go public

  • Stone Point and KKR acquired Focus in July 2017
  • Stone Point is investing out of Trident VII, which closed on $5.5 bln in 2017
  • Focus is a partnership of wealth-management firms

Focus Financial Partners is expected to go public later this month, just a year since it was sold to KKR and Stone Point Capital.

Focus Financial is seen pricing its initial public offering on July 25, a source said. IPOs typically trade the following day.

The New York company is expected to trade on Nasdaq under the ticker FOCS.

Focus Financial is looking to raise $600 million by selling 16.2 million shares at a hefty $35 to $39 each. Underwriters on the deal have the option to buy another 2.4 million shares (the greenshoe).

Founded in 2004, Focus is a partnership of wealth-management firms — 56 as of July 15 — most of which are RIAs registered with the SEC. This year, Focus acquired Asset Advisors Investment Management and Cornerstone Wealth Group.

Focus typically buys all the assets of the firms it acquires, purchasing 40 percent to 60 percent of the target’s cash flow, Moody’s Investors Service said in a May 2017 report.

Focus exchanges cash, equity and contingent considerations to gain preferred positions, the credit-rating company said. Focus also negotiates management agreements with the selling principals so they continue managing the day-to-day operations of the companies, Moody’s said.

Focus posted a 2017 net loss of $48.4 million on revenue of $663 million, a July SEC filing said.

Stone Point and KKR acquired Focus Financial in July 2017. How much the PE firms invested is unclear. The deal, valued at $2 billion, included $1.25 billion in loans, the SEC filing said.

Centerbridge Partners, Summit Partners and Polaris Partners were the sellers.

Stone Point, of Greenwich, Connecticut, and New York, is a financial-services-focused PE firm. It used its sixth fund, which raised $4.5 billion in 2014, to invest in Focus. Stone Point is investing out of Trident VII, which closed on $5.5 billion in 2017.

KKR, also of New York, used its latest PE fund to invest in Focus. KKR Americas XII Fund closed on $13.9 billion in 2017.

PE firms typically do not sell stock in IPOs of their portfolio companies. Neither Stone Point nor KKR is selling shares in the Focus IPO.

Stone Point owns a combined 35 percent of the voting power, which will drop to 33.6 percent after the IPO (assuming the greenshoe is exercised).

KKR has 15.6 percent of the combined voting power, which will fall to 15 percent after the IPO.

Stone Point, KKR and Focus could not be reached for comment.

Action Item: Contact J. Russell McGranahan, Focus’s general counsel, at +1 646-519-2456