Genworth Sells Wealth Management Unit for $412.5M

Private equity firms Aquiline and Genstar to acquire GFWM and alternatives firm Altegris; management team to stay in place

Genworth Financial (GNW) announced Thursday that it is selling its Genworth Financial Wealth Management unit to a partnership of two private equity firms—Genstar Capital and Aquiline Capital—for $412.5 million.

According to the parent company, the deal is expected to close in the second half of 2013, and it will take a $40 million after-tax loss, with $35 million recorded in the first quarter. Genworth Financial said proceeds of the deal would be used to “address” its debt coming due in 2014 or before.

Ahluwalia GurinderWhat will the deal mean for advisors who use Genworth Financial Wealth Management’s platform? According to Gurinder Ahluwalia (left), president and CEO, there will be no short-term changes for those RIAs and independent BD reps who form the core of GFWM’s advisor clients.

Longer term, he said, the acquisition will be positive for advisors, leading to “more enhancements and more investment in the business,” which includes its TAMP investment platform and technology and practice management tools, including Altegris’ liquid alternative investing products.

“Genworth decided we weren’t core to their business,” Ahluwalia said in a Thursday interview, while with its new owners, “we have a couple of firms who love our business.” Not only will Ahluwalia and his management team stay in place,  so will GFWM’s “mission and organization,” he said. “You want to be in a place where your vision is shared by your corporate parents,” Ahluwalia said, and as for his management team, “We’re pretty jazzed.”

When asked whether the two private equity firms were interested in a shorter-term return on their investment, Ahluwalia said that while he couldn’t speak for Genstar and Aquiline, he knew that a short turnaround of their investment was not the plan. “We’re going to invest in the business for a longer-term outcome. For me that means new solutions—investing or technology,” he said, mentioning that he and his top managers were engaged in the presale discussions: “We’ve engaged with them our vision of a multiyear plan; they’re absolutely aligned with our growth objectives.” 

Those words were echoed in Genstar and Aquiline’s announcement of the acquisition, stating that “Aquiline and Genstar will bring their operational expertise and industry experience to help GFWM and Altegris increase their scale and capabilities,” specifically “to enhance product development and technology offerings at GFWM, and expand distribution channels and launch new alternative products at Altegris."

Jeff Greenberg, CEO of New York-based Aquiline, called GFWM and Altegris “market-leading businesses with strong brands, experienced management teams and high growth potential,” while San Francisco-based Genstar principal Tony Salewski said in the same statement that GFWM and Altegris were “each well-positioned to meet the growing needs of independent financial advisors and increased demand from retail investors for access to alternative products.” 

Ahluwalia has guided GFWM from its beginnings as Genworth Financial Asset Management to an integration with AssetMark Investment Services and then acquisitions of Quantuvis Consulting and Altegris, making GWFM one of the fastest-growing investment outsource providers to advisors. While the name of the company will change—“that’s something we’ll be working on from now until closing” of the deal—he argues that what won’t change is the firm's focus on risk management. “It’s such an important principle for advisors,” he said, “around their practice but also for their investment clients.”

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