PE HUB Wire Highlights, 9.24.18

Private equity dominates Ascensus auction; Tailwind Fund III raises $1.8 bln; SEC targets a fund revamp. Are the floodgates open?

Happy Monday, Hubsters. It’s turned into fall here on the East Coast and it’s even chilly. It’s time for pumpkin-everything.

Normally, in the mornings, I like to call attention to some big issue like tariffs or global warming or what shoe company was sold. Not today. On this Monday, I have something unusual. LPL Financial, a broker dealer that was once owned by TPG Capital and Hellman & Friedman, has apparently made a video warning of the dire consequences for financial advisers if they sell their b-d to PE.

According to InvestmentNews, LPL is “dissing its rivals, including Cetera Financial” in a four-minute video that warns broker-dealers about the dangers of PE. Such a deal may have some benefits but if the main goal of the PE firm “is short-term profit, with plans to divest themselves within three to five years, this could pose significant challenges, disruptions to the business, and uncertainty for the financial advisers they support,” the story said. The video also says that the PE story is “mixed, with some great successes,” like LPL going public, and some not so great outcomes, like RCS Capital Corp. RCAP slid into bankruptcy in early 2016 when it was unable to pay its debt, InvestmentNews said.

Now, I’ve not seen the video, Hubsters. But this sounds a little bitter, especially since LPL was owned by PE. Hellman and TPG acquired a majority of LPL in 2005. The b-d went public in 2010, raising $469.7 million in its IPO. TPG and Hellman look as though they’ve cashed out. (LPL is not listed as a current portfolio holding for either firm.)

The LPL video makes no mention of Cetera or other firms, InvestmentNews said. Cetera and LPL are reportedly well-known rivals. Cetera was also the subject of a very public auction over the summer. LPL was believed to be one of the bidders (Although I’m not sure they did make an offer.). Genstar emerged as the winner and its $1.7 billion buy of Cetera is expected to close soon.

Hubsters, if you have a copy of the video, please send to me at lbeltran@buyoutsinsider.com

Regulatory action: Chris has a column on how the SEC has finally came out with an action against a secondary restructuring deal. This is something Chris has been waiting for since agency officials started making public noise about these deals years ago. Are the floodgates open? Find out more here.

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