Schwab Takes Minority Stake in Dynasty Financial Partners

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Charles Schwab and private equity firm Abry Partners are taking a minority stake in independent RIA network Dynasty Financial Partners, according to a company announcement. 

As a result of the cash infusion, Dynasty also said it will file a request to withdraw its Registration Statement Form S-1, initially filed with the SEC at the beginning of this year, ending plans to pursue an initial public offering. 

“After evaluating the state of the public markets, our board decided to have a handful of conversations with potential private investors,” Dynasty CEO Shirl Penney said in a statement. “Having been afforded the luxuries of optionality and time, there were two requirements that were atop my list as we went through the process—partnership and alignment. I am delighted to say that several firms viewed the process in the same light and am excited to welcome Abry and Schwab to sit alongside our already extremely supportive group of investors.”

The size of the investment by the two firms was not disclosed. Several of Dynasty’s existing investors and board directors also invested capital in the round, the firm said. In conjunction with the deal, Dynasty said it had executed an “equity swap” with several of the advisory firms in its network, taking minority stakes in the firms in return for Dynasty equity. 

The company said it plans to use money from the investment to boost technology and tech integrations, as well as its core services to RIAs. It said it will further build out its TAMP and add additional staff. The company also will invest more in Dynasty Capital Strategies, the firm’s specialized financing program, and possibly pursue a merger or acquisition at the corporate level. 

In January, Dynasty filed to list its Class A common stock on the Nasdaq Global Market under the symbol “DSTY.” The offering was never priced. The S1 was amended in August. 

Earlier this year, Dynasty closed on a $50 million credit facility from RBC Capital Markets, UMB Bank, J.P. Morgan, Citibank and Goldman Sachs Bank.

“At a time when many businesses in the space are forced to hunker down and play defense, dragged down by leverage and rising interest rates, Dynasty is positioned to charge onto the offensive with fresh, friendly capital, a fortress balance sheet, and favorable margins,” Dynasty CFO Justin Weinkle said in a statement. “Despite market volatility, the ‘Era of Independence’ continues to experience tailwinds as Dynasty positions to invest and continue executing on behalf of its clients and investors.”

Charles Schwab serves as the custodian for over half of the $72 billion in assets under advisement in the Dynasty network, according to the announcement.

Boston-based private equity firm Abry Partners is a private equity manager and leveraged buyout firm. In March 2020, Abry Partners took a minority stake in RIA Beacon Pointe Advisors as that firm restructured and consolidated two separately operating companies, then sold it to investment company KKR 19 months later. Abry Partners also has a stake in retirement account custodian Millennium Trust Company. 

“When looking at the RIA space and the growing ecosystem around it, Dynasty was one of the select brands we had been following for some time. We are thrilled to have the opportunity to invest in the leading wealth technology and integrated services platform in the RIA space and are looking forward to putting all of Abry’s resources behind the growth of the firm and its clients,” Abry Partners Partner James Scola said.

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