May 21, 2010

Envestnet's $100 Million IPO Comes as Advisors Seek More Market Transparency

UBS, Morgan Stanley, Barclays to underwrite firm's open-architecture tech platform

Envestnet Inc., a Chicago-based investment technology provider, has filed for an initial public offering of common stock with the Securities and Exchange Commission (SEC) in hopes of reaping a $100 million cash infusion as the financial advisory industry grows alongside demands for greater market transparency.

"The wealth management industry has experienced significant growth in terms of assets invested by retail investors in the past several years," Envestnet's S-1 regulatory filing states, pointing to Federal Reserve statistics showing that U.S. household and non-profit organization financial assets totaled $45.1 trillion as of December 31, 2009, up from $41.7 trillion in 2008 and $35.3 trillion in 2003.

At the same time, the issue of fiduciary responsibility is coming to a head on Capitol Hill. The Dodd bill on financial reform, in particular, has driven financial advisors to seek new ways to offer their clients better market transparency. And firms such as Envestnet are capitalizing on this trend.

"There's a real opportunity for advisors to not only understand what's happening with fiduciary reform, but we want to be able to provide a source of education and drive them to considering our platform or others that can help bring transparency to the process," said Jim Patrick, managing director of Envestnet's advisor-managed programs, in an interview on Thursday, May 20. "Our platform can deliver full transparency and full choice to users."

Despite IPO market weakness, deal underwriters Morgan Stanley, UBS Investment Bank, and Barclays Capital are signing on for the deal. Proceeds would go toward Envestnet's general corporate purposes such as selective strategic investments through acquisitions, alliances, or other transactions.

Envestnet, which has applied to list its stock on the New York Stock Exchange under the symbol ENV, was founded in 2000 and provides RIAs as well as institutional advisors with Web-based investment solutions that include financial planning, proposal generation, program and product selection, asset allocation, performance reporting, billing, portfolio construction, implementation and advisor
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