Summit Financial has clinched its 13th minority investment in a registered investment advisor. Through its affiliate Summit Growth Partners, the firm has acquired a less than 20% stake in Kandor Global, an RIA that targets ultrahigh-net-worth clients globally, according to CEO Stan Gregor. Financial terms of the deal, which closed in the first quarter, weren’t announced.
The international wealth-management business has gone through much change in the last decade, Gregor tells Barron’s. Many large firms, including Wells Fargo (ticker: WFC), UBS (UBS) and Bank of America (BAC) have exited the space. For example, Wells Fargo in January decided to stop catering to clients outside the U.S. Summit, due to the turmoil, was looking for an advisor that catered to international clients, Gregor says.
Kandor, of Miami, provides investment services, tax and estate planning, as well as analytics to Latin American ultrahigh-end entrepreneurs, families, and institutions. This includes clients in the U.S. or in their home country, Gregor says. Kandor, led by CEO Guillermo Vernet, is positioned to take advantage of the international disruption. “We were very impressed with Kandor Global’s leadership team and are excited about our partnership,” Gregor says in a statement.
“We are seeing more and more highly successful Latin American entrepreneurs and families flock to the U.S. to expand their businesses and their wealth. We have the experience and resources through Summit Growth Partners to serve this specific subset of clients at the highest level and address their unique financial needs,” Vernet says in the statement.
Kandor was not up for sale, Gregor says. Neither Kandor nor Parsippany, N.J.-based Summit used an investment bank on the transaction.
The investment is the 13th for the financial services firm since it launched Summit Growth Partners in the fourth quarter. Summit is currently in discussions with roughly a dozen RIAs, Gregor says. The firm targets minority stakes in advisors that are looking to grow. It typically invests “seven figures” while the smallest firm in its portfolio has $140 million in assets under management and the biggest has $1.3 billion, Gregor says. Kandor has $450 million in AUM.
Summit seeks to invest in RIAs that want to sell a portion of their business, possibly 20%, where the advisors retain control of the businesses, Gregor says. “We have no desire to do a private-equity buyout and then the advisors become employees of some sort of model. That wouldn’t fly. You stay in control,” he says. Summit also provides options for older advisors who are seeking a succession plan, Gregor says.
Summit Financial Holdings, the parent of Summit Growth, Summit Financial, Summit Risk Management and Summit Advisory Services, is also weighing options to monetize its business This could include an initial public offering, Gregor said. When asked about the timing of a possible IPO, Gregor says: “I don’t know when that might happen. … Right now, we’re focused on growth and helping advisors build their practice and their companies. It’s a ways away.”