RCS Capital Corporation has entered into an agreement to acquire Cetera Financial Group from Lightyear Capital for US$1.15 billion in cash, subject to certain customary adjustments.
Following this transaction, Cetera and its subsidiaries will become part of RCAP’s retail advice platform, complementing the recently announced acquisitions of Summit Brokerage Services and Investors Capital Holdings.
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Valerie Brown, President and Chief Executive Officer of Cetera, and her management team, will continue to operate Cetera’s respective brands as part of the RCAP family of companies.
Nicholas S. Schorsch, chairman of RCAP, said: "I have great respect for the fantastic work Lightyear and their executive team achieved in building value at Cetera. It has been great working with Don Marron, Chairman, and the management group at Lightyear and we are excited to have the opportunity to build on their success as we craft the next iteration at Cetera.
"Our partnership with Valerie, her senior management team and all of the financial advisors across the U.S. who have chosen to associate their practices with Cetera, represents for us a truly transformative event. We intend for RCAP to be the most important full-service financial services and securities distribution company in the industry by joining our financial advice practice, wholesale distribution and capital markets expertise, and continuously executing on these strategies through our transaction management group. Furthermore, it is our plan to rapidly build out our footprint across America in one seamless step with our family of independently operated retail firms, led by Cetera."
William M. Kahane, CEO of RCAP, said: "This transaction immediately affords us the benefits of scale, while setting the quality standard in the industry. It enables us to diversify our revenue streams and position our securities sales business to attract best-of-class third-party sponsors, thus mitigating concentration risk among our retail firms. It adds substantially to our assets under administration, and makes our overall enterprise uniquely attractive to other retail advice firms who believe they could benefit by aligning themselves with a dominant, well capitalized, public firm with a complete understanding of the industry and a demonstrated commitment to excellence."
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By GlobalDataFormed in 2010 following the sale of three ING broker-dealers, Cetera is a financial services holding company that provides independent broker-dealer services and investment advisory services through four distinct independent broker-dealer platforms: Cetera Advisors, Cetera Advisor Networks, Cetera Financial Institutions and Cetera Financial Specialists.
With approximately 6,660 registered representatives across the United States, Cetera will enable RCAP to grow its retail distribution footprint. In addition, the acquisition of Cetera further demonstrates RCAP’s continuing commitment to building an integrated, best-in-class, full-service platform dedicated to meeting the needs of the retail investor.
Cetera’s inclusion within RCAP’s retail advice business line both complements and diversifies RCAP’s revenue stream, which presently is derived from its wholesale distribution business, investment banking and capital markets services, transaction management and transfer agency lines of business.
Michael Weil, president of RCAP, said: "RCS Capital is both pleased and excited to begin this journey with Valerie Brown, CEO of Cetera Financial Group, and the Cetera family. We are pleased because, under Valerie’s leadership, Cetera has carefully constructed one of the premier financial services firms in the country. We are excited because the combination of Cetera, under Valerie’s continuing stewardship, RCAP Holdings’ First Allied Securities under Adam Antoniades’ leadership and the upcoming additions of Investors Capital Holdings and Summit Financial Services, presents in our view the single greatest opportunity to continue to create positive changes in the independent broker dealer industry, bring meaningful benefits to our nearly 9,000 combined advisors, and provide a better level of service to our 2.5 million investors. Our success across business lines has always been a function of the human capital that drives these businesses. Having Valerie, her senior management team, her broader organization, and Cetera’s advisors join RCS Capital substantially advances and accelerates our announced plan to become the dominant full-service, investment bank and securities sales firm in the industry."
Valerie Brown, CEO of Cetera Financial Group, said: "I have devoted my career to serving the best interests of clients by providing a world-class platform for the financial advisors who serve them. In pursuit of this goal, Cetera Financial Group has become one of the preeminent retail advice platforms in the industry. By joining the RCS Capital family of companies, we become the cornerstone of the second largest independent financial advisor network in America and are positioned for even greater success in the future. Our shared vision for building a better industry through a combination of products, services and advice that begins and ends with the investor is what made the decision to merge an easy one."
The closing of the transaction is subject to FINRA approval and other customary closing conditions. The transaction is expected to close later in 2014.
RCS Capital, the investment banking arm of RCAP, and Barclays acted as financial advisors to RCAP. Bank of America Merrill Lynch, Barclays, and Luxor Capital Group provided financing to RCAP. Proskauer Rose LLP acted as legal advisor to RCAP, while Duane Morris LLP acted as counsel to the special committee of the board of directors of RCAP. Bank of America Merrill Lynch acted as financial advisor to Cetera. Simpson Thacher & Bartlett LLP acted as legal advisor to Cetera.
