Private equity firms can play a unique role in the process of an asset manager going public through an IPO, said Tom Narratil.
It’s part of the role the former co-president of UBS’s Global Wealth Management believes he’ll take on in his new role at New York-based private equity firm Lightyear Capital. Lightyear, which had $4.1 billion in assets under management at the end of last year, announced Monday that it will bring on Narratil as an operating partner.
Narratil said he wants to help Lightyear Capital build on its long history of investing in wealth management and financial services companies.
“Many companies are in the growth stage and an IPO may be the next step, but it’s not the current step,” he said. “Now is the time for private equity firms to help these companies truly set themselves up for the next step.”
Founded in the early 2000s, Lightyear Capital currently holds shares in Allworth Financial, Cerity Partners and Len Sterling. Investments to date include: Former Advisor Group (now Osaic)Cetera Financial Group, Clarion Partners, RidgeWorth Financial and Wealth Enhancement Group.
Of these companies, experts have often pointed to the possibility that Ozaic and Cetera’s private equity backers could take them public. Still, initial public offerings (where a company sells shares on a public exchange for the first time) are still fairly rare in the wealth management industry.
LPL Financial, the largest broker-dealer in the United States, $445 million initial public offering in November 2010. On the other hand, Focus Financial Partners, a registered investment advisory aggregator, contracted to go private again Following its IPO of over $500 million in July 2018,
Meanwhile, private equity has played a significant role in recent acquisitions in the wealth management business.Investment Banks and Consulting Firms Echelon Partners points out in July 10 report As for industry mergers and acquisitions, most of the big deals in the first half of this year have private backers.
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Tim Welsh, president of wealth management consultancy Nexus Strategy, said private equity investors prefer advisory firms because of their ability to generate cash and their position in a growing industry. Mr. Welsh said private equity allows senior advisors to worry less about finances and more about how the business is run.
“It reduces some of the risk for founders, so they can move forward with confidence without having one foot on the brake and one foot on the accelerator,” he said. “They can step on the accelerator and move forward without having to bet so much capital.”
Narratil said private equity firms typically invest in companies for a range of three to seven years and then look to sell them for a profit. We can provide both financial support and knowledge reserves from purchase to sale.
“It’s a combination of growth capital and subject matter expertise and a track record of actually helping entrepreneurs grow their companies,” he said.
Narratil’s relationship with Lightyear Capital dates back to when he and private equity firm founder Don Maron worked together at former investment bank and brokerage firm PaineWebber. Narratil, Maron and another executive, Mark Vassallo, were all at the company when PaineWebber was acquired by UBS in 2000. Shortly thereafter, Maron founded Lightyear Capital and Vassallo became its managing partner. Following Marron’s death in 2019.
Narratil himself spent a total of 39 years at PayneWebber and UBS. He last served as co-president of UBS Global Wealth Management and president of the company’s Americas division.
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Narratil said he decided to retire in October 2022 after overseeing the company’s revenue growth plans and helping it navigate through the COVID-19 pandemic. UBS has appointed Narratil co-president Iqbal Khan as sole president of its Global Wealth Management division and Noreen Hassan as head of its Wealth Management Americas business.
“When I decided to leave UBS and started thinking about what I wanted to do next, I was looking for positive answers to three questions,” said Narratil. “Am I going to a company that I like and trust? Will I be able to make a material contribution? And am I going to learn something new? “