said investment funds managed by the private-equity firm have agreed to buy Janney Montgomery Scott, a $150 billion wealth management firm, from The Penn Mutual Life Insurance Company.
The transaction is expected to close in the fourth quarter, according to KKR, which did not disclose terms.
KKR said it was attracted to Janney because of the firm’s growth and its positioning within the wealth management sector. The PE firm said it can help Janney expand its business, and that it will help Janney create an equity ownership program for Janney’s 2,300 employees after the transaction closes.
“Janney’s well-respected brand, client-centric culture, and strong track record of growth have established it as a best-in-class business that we believe is well-positioned to benefit from the significant tailwinds driving demand in the U.S. wealth management market,” said Chris Harrington, a partner at KKR.
After the deal closes, Janney will be operated as a standalone private company. The Philadelphia-based brokerage firm, which traces its roots to 1832, has more than 900 financial advisors. It has a large presence on the East Coast of the U.S., with 135 offices. Janney is one of the largest so-called regional broker-dealers and has had success recruiting financial advisors from large national brokerage firms such as Merrill Lynch.
Advertisement – Scroll to Continue
“We are excited to enter this next chapter in our nearly 200-year history with a new value-added strategic partner,” said Tony Miller, president at Janney. “KKR has demonstrated they value our client- and advisor-centric culture and share our deep conviction in the tremendous opportunities ahead for our business. We look forward to working with KKR to invest further in our growth and enable our talented team to further improve the advice and services we offer our clients.”
KKR’s deal to buy Janney will be one of the largest acquisitions a private-equity firm has made within the wealth management sector. PE firms have been investing in the sector because of its steady revenues. They’ve bought stakes in RIAs and independent broker-dealers. They have also bought companies that provide technology, asset management, and other services to wealth managers. For example,
recently agreed to sell itself to private-equity firm Bain Capital in a deal that values Envestnet at $4.5 billion.
New York-based KKR has previously made investments in Beacon Pointe, a registered investment advisor, and Focus Financial, a network of RIAs.
Advertisement – Scroll to Continue
Penn Mutual has owned Janney since 1982. CEO Dave O’Malley said the deal with KKR is a great outcome for Janney and Penn. “Janney has been a strong investment for Penn Mutual’s general account for the last 40 years,” he said. “We have been good stewards and are looking forward to watching Janney’s next chapter of growth.”
Write to Andrew Welsch at andrew.welsch@barrons.com