Equities

Bain, Reverence Buy Envestnet in $4.5B Deal, Big Names Involved

Bain and Reverence Capital to acquire Envestnet for $4.5 billion, closing expected in Q4 2024.

By Alex P. Chase

7/11, 13:05 EDT
BlackRock, Inc.
Envestnet, Inc
State Street Corporation
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Key Takeaway

  • Envestnet to be acquired by Bain Capital and Reverence Capital Partners for $4.5 billion, including debt, at $63.15 per share.
  • The deal involves major asset managers like BlackRock, Fidelity, Franklin Templeton, and State Street Global Advisors holding minority stakes.
  • Acquisition highlights growing interest in wealth management tech amid demographic shifts; Envestnet manages over $6 trillion in assets through 100,000 advisers.

Envestnet Acquisition Details

Envestnet, a provider of specialized software and data tools for the wealth management industry, has agreed to be acquired by a consortium led by Bain Capital and Reverence Capital Partners. The deal, valued at $4.5 billion including debt, underscores the growing interest in wealth management services driven by demographic shifts and technological advancements. The consortium also includes traditional asset managers such as BlackRock, Fidelity Investments, Franklin Templeton, and State Street Global Advisors, who will hold minority positions in Envestnet post-acquisition.

The acquisition price is set at $63.15 per share, representing a 2.3% premium over Envestnet’s closing share price of $61.70 on the New York Stock Exchange. The deal is expected to close in the fourth quarter of 2024. Envestnet’s tools are utilized by over 100,000 financial advisers to manage more than $6 trillion in assets, making it a significant player in the wealth management technology space.

Strategic Investments and Future Plans

The acquisition highlights the strategic importance of Envestnet’s technology platform, which offers a range of mutual funds, exchange-traded funds, and separately managed accounts, alongside research and asset allocation advice. State Street emphasized that its investment aims to increase exposure to the growing independent wealth advisory and high net worth markets. BlackRock, which has been an investor since 2018, views Envestnet as a crucial distribution point for its wealth management business.

Marvin Larbi-Yeboa, a partner at Bain Capital, stated that the consortium would focus on "making further investments in its differentiated product offering." Milton Berlinski, head of Reverence Capital, added that the group was attracted to Envestnet’s "scale and competitive advantages in an industry that benefits from strong fundamental tailwinds."

Bain Capital plans to finance the acquisition with approximately $2 billion in debt, with large banks such as RBC, BMO, Barclays, and Goldman Sachs providing some of the financing. Additionally, a loan will be led by a group of private credit lenders, including Ares, Blue Owl, and Benefit Street Partners, which is owned by Franklin Templeton.

Market Context and Industry Trends

The acquisition of Envestnet comes amid a flurry of strategic ventures and takeover activity in the wealth management sector. In June, Envestnet announced a collaboration with the four asset managers in the buyer group to launch personalized strategies and consulting aimed at wealthy investors. This move aligns with the broader trend of traditional asset managers seeking to profit from the increased longevity of savers and a significant transfer of wealth to younger, more tech-savvy clients.

Last month, US private equity group Advent International led a stake in Fisher Investments, one of the world’s largest registered investment advisers, worth up to $3 billion. This investment was driven by the expectation that rising affluence and a transfer of wealth to millennial savers will bolster demand for wealth management services. Other private equity firms, such as Blackstone, Hellman & Friedman, Apollo Global, and Clayton, Dubilier & Rice, have also acquired large platforms serving registered investment advisers.

According to a recent study from PwC, there were 79 asset and wealth management deals announced in the first quarter of 2024, the highest since early 2023. Investment in technology and the need to counteract a yearlong trend of decreasing fees are driving asset managers’ dealmaking appetites.

Street Views

  • Marvin Larbi-Yeboa, Bain Capital (Bullish on Envestnet):

    "The consortium would focus on making further investments in its differentiated product offering."

  • Milton Berlinski, Reverence Capital (Bullish on Envestnet):

    "The group was attracted to Envestnet’s scale and competitive advantages in an industry that benefits from strong fundamental tailwinds."