Charles Schwab Corp. has agreed to sell Forge Trust Co., a self-directed IRA custodian, and its parent company, Forge Services Inc., to Alto, a marketplace and custodian connecting retirement capital with private market opportunities.
Forge Trust is a South Dakota-chartered custodian and a subsidiary of Forge Global Inc., which Schwab acquired in a $660 million deal finalized earlier this year. The deal will add Forge Trust’s alternative asset classes and account types and client and partner relationships to Alto’s technology, custody and investment infrastructure.
For Nashville, Tenn.-based Alto, this builds on its efforts to bring private-market investments to self-directed IRAs. In August, Alto launched Private Deal Room, a platform for RIAs to execute self- and client-sourced private market deals.
Private Deal Room allows advisor clients to fund private investments through qualified retirement assets. Alto manages the custodial and transactional processes associated with holding eligible private investments in retirement accounts. Advisors can oversee client accounts, cash balances, transfers and private investments through a centralized digital platform.
For Schwab, the decision for the strategic disposition came after a review of Forge Global after the acquisition, which the firm undertook to broaden its private market capabilities, including access to pre-IPO companies.
“As part of our ongoing integration efforts, we conducted a thoughtful review of areas where capabilities overlap across the combined organization,” according to a Schwab spokesperson. “Following that review, we’ve reached an agreement to divest the Forge Trust business. We are committed to Forge’s private markets platform and are excited about the capabilities it brings to Schwab clients.”
Upon closing, the combined Alto/Forge business will have more than $20 billion in assets under custody and administration, more than 60,000 self-directed IRA accounts holding private market assets, and over 3 million Custody-as-a-Service accounts, according to Alto.
“We see an enormous opportunity to bring alternative assets into the financial mainstream by making retirement capital easier to put to work,” Alto founder and CEO Eric Satz said in a statement. “Forge Trust’s alternative asset offerings are complementary to Alto’s modern, user-friendly and API-enabled infrastructure, and together reduce the friction that has kept retirement capital out of private markets. This is the platform that delivers what private market retirement investing has needed.”
Financial terms of the transaction were not announced. J.P. Morgan Securities LLC is serving as financial advisor to Schwab, and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Schwab. O’Melveny and Myers is serving as the lead legal advisor to Alto.