PE firm KKR acquires Janney Montgomery Scott from Penn Mutual – The UBJ

KKR, a leading global private equity firm, announced its intention to acquire Janney Montgomery Scott, a leading player in the asset management industry, from The Penn Mutual Life Insurance Company. This landmark transaction, expected to close in the fourth quarter of 2024, is one of the highest-profile acquisitions in the asset management industry by a private equity firm in recent years. While KKR did not disclose financial terms of the deal, the acquisition underscores the firm’s strategic focus on expanding its footprint in the asset management industry.

Strategic vision and future plans

KKR’s decision to acquire Janney Montgomery Scott is driven by the firm’s robust growth and its influential role in the asset management industry. Chris Harrington, a partner at KKR, highlighted Janney’s strong reputation, client-focused approach and impressive growth track record as key factors in the firm’s interest. Harrington emphasized that KKR plans to leverage its resources and expertise to further enhance Janney’s operations.

One of KKR’s key strategies following the acquisition is to implement a stock ownership program for Janney’s approximately 2,300 employees. This initiative is designed to align the interests of Janney’s employees with the company’s long-term goals and to foster a culture of ownership and engagement.

“Janney’s respected brand, client-focused culture and strong track record of growth have established it as a best-in-class company that we believe is well-positioned to capitalize on the significant tailwinds driving demand in the U.S. asset management market,” Harrington said. This sentiment reflects KKR’s confidence in Janney’s ability to capitalize on the growing opportunities within the sector.

Following the acquisition, Janney Montgomery Scott will operate as a standalone, privately held entity. The firm, which has been in business since 1832, is headquartered in Philadelphia and has a significant presence on the East Coast with 135 offices and more than 900 financial advisors. Janney has gained recognition as one of the largest regional broker-dealers and has demonstrated success in attracting financial advisors from large national brokerage firms such as Merrill Lynch.

Tony Miller, President of Janney Montgomery Scott, expressed optimism about the partnership with KKR. “We are excited to enter this next chapter in our nearly 200-year history with a new value-added strategic partner,” Miller said. He emphasized that KKR’s appreciation for Janney’s client- and advisor-focused culture aligns with the firm’s values ​​and vision. Miller also noted that the partnership will allow Janney to further invest in its growth and enhance the services it provides to its clients.

Trends in private equity investments in asset management

KKR’s acquisition of Janney Montgomery Scott is part of a broader trend of private equity investment in the asset management sector. Private equity firms are increasingly attracted to the sector because of its stable revenue streams and growth potential. In recent years, there has been a notable increase in investment in registered investment advisors (RIAs) and independent broker-dealers.

For example, Envestnet, a major player in the financial services industry, was recently acquired by private equity firm Bain Capital in a deal valued at $4.5 billion. KKR has previously invested in Beacon Pointe, a registered investment advisor, and Focus Financial, a network of RIAs. These investments reflect a strategic interest in the asset management sector, driven by its stability and growth prospects.

The trend also includes investments in technology and asset management services that support wealth management firms. The rise of digital platforms and technological advancements have transformed the way wealth management services are delivered, with a growing emphasis on connected TV (CTV) and programmatic advertising.

Penn Mutual’s Perspective

Penn Mutual, which has owned Janney Montgomery Scott since 1982, sees the deal with KKR as a positive development for both Janney and Penn Mutual. CEO Dave O’Malley praised the acquisition, emphasizing that Janney has been a valuable investment for Penn Mutual’s general account business over the past 40 years. “Janney has been a strong investment for Penn Mutual’s general account business over the past 40 years,” O’Malley said. He expressed confidence that the deal will facilitate Janney’s continued growth and success in the future.

Conclusion

KKR’s acquisition of Janney Montgomery Scott represents a significant development in the private equity and wealth management sectors. The transaction underscores KKR’s strategic focus on expanding its presence in wealth management and its commitment to supporting Janney’s growth. With KKR’s support, Janney is poised to strengthen its market position and enhance its service offerings. The deal also underscores the growing trend of private equity investment in the wealth management industry, driven by its stable performance and growth potential.

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