Steward Partners Sells $100 Million Minority Stake to the Pritzker Organization | Barron’s (barrons.com)
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June 8, 2021 3:45 pm ET
Steward Partners received a $100 million investment from the Pritzker Organization, an influx of cash that may accelerate the registered investment advisor firm’s already brisk expansion.
“It’ll really ramp up our growth,” says Jim Gold, CEO of Steward Partners, adding that the firm intends on using its new funds to build a custom technology system, add more advisors, ink M&A deals, and offer a liquidity opportunity for its partners. The deal is a milestone in Steward Partners’ evolution. Founded by former Morgan Stanley managers in 2013, the firm has grown to 170 advisors, 27 offices, and $23 billion in client assets, according to the company. It ranked No. 24 on Barron’s Best RIA Firms in 2020.
Steward Partners, which is headquartered in Washington, D.C, recently expanded to the West Coast through its acquisition of Umpqua Investments, adding $3.4 billion in client assets and 22 advisors, according to the company.
The custom tech system will ease Steward Partners’ recently announced plans to become multicustodial, which will be a boon to the firm’s advisors and facilitate acquisitions of other advisory firms that use different custodians, according to Gold.
“We’re expanding the target audience for Steward’s offering,” Gold says.
Steward Partners has had a partnership with Raymond James Financial’s independent broker-dealer, but is transitioning to the company’s RIA custody platform. Through its Umpqua acquisition, Steward Partners acquired the firm’s broker-dealer and staff. Gold declined to say which other custodians Steward Partners will work with.
“We have a great relationship with Raymond James,” Gold says. “The opportunity is to give advisors a choice. We can say, ‘Hey we work with a number of custodians—you tell us which is the best fit for your business.’”
The firm’s efforts to build a new technology platform and develop multiple custodial options will take months, Gold says. “We’re not in a rush to get it out; we want to get it right and then get it out in a measured fashion.”
A Raymond James spokeswoman was unavailable for immediate comment.
The Pritzker Organization, a family office, will be a minority investor in Steward Partners. It’s the second time that the RIA has taken outside capital. The Cynosure Group, a Salt Lake City-based private investment firm, made a $50 million investment in Steward Partners in March 2019.
The deal with Pritzker was attractive in part because it is a family office and brings a “buy-to-build” mentality to its investments, according to Gold.
Jason Sussman, principal at the Pritzker Organization, says the firm takes a long-term view of its investments, some of which it has held for decades.
“We have had exits, obviously, but we don’t go into an investment with a focus on an exit,” Sussman says “Our focus is on long term growth.”
The Pritzker Organization will gain two seats on Steward’s board of directors as part of its investment. Like Steward itself, the board includes veterans of Wall Street’s largest wealth managers: Charlie Johnston, former president and CEO of Smith Barney, and Bob Mulholland, former head of the Wealth Management Advisor Group at UBS.
For the Pritzker-Steward deal, the Pritzker Organization worked with advisory partner Scott Roulston and received legal advice from law firm Latham & Watkins. Steward Partners’ financial advisor for the deal was Goldman Sachs, and law firm Goodwin Procter provided legal advice.