PE dominates Cetera Financial auction

  • Second round bids for Cetera due in early July
  • Cetera seeking offers of $1.5 bln to $2 bln
  • Lightyear previously owned Cetera

The auction of Cetera Financial has moved into the second round, sources said.

Private equity is dominating the process with Lightyear Capital in the lead, sources said. Lovell Minnick Partners is still in the hunt and partnering with another firm on a bid, people said. It’s unclear who that firm is. GTCR and Reverence Capital Partners are out, people said.

Second round bids are due in early July, two people said. Goldman Sachs is advising on the process; Cetera is seeking offers of $1.5 billion to $2 billion, Buyouts has reported.

“We are pleased with the progress we are making with our capital structure review process,” said Joseph Kuo, Cetera’s spokesman, in a statement. “As we’ve stated from the outset, we will be very selective in choosing any partner as part of our long-term capital enhancement plans, and we remain focused on driving an outcome that is designed to deliver sustained value for all our key stakeholders, including the advisers and institutions we support. Beyond this, we have no further public comments at this time on the process.”

Lightyear, with its portfolio company Advisor Group, is trying to buy Cetera. Because it previously owned the company, Lightyear was seen as having the upper hand in the Cetera process. The PE firm founded by Don Marron might not have the deal sown up.

“[Lightyear/Advisor Group] are not preferred by management or the Cetera advisors,” one of the sources said. “So it’s tough for them to win.”

Cetera confirmed in February that it had launched a capital-structure review as it aimed to lower costs and maximize growth. The El Segundo, California company officially went up for sale in May, Buyouts reported.

Cetera is composed of six broker-dealers: Summit Brokerage Services IncCetera AdvisorsFirst AlliedCetera Advisor NetworksCetera Financial Specialists and Cetera Financial Institutions.

The process was expected to attract strategics, specifically Ameriprise Financial and LPL Financial. It’s unclear if they’re still in the process.

Ameriprise, LPL, Lightyear and Goldman could not be reached for comment. Executives for Lovell Minnick declined comment.

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