October 2, 2013

Billionaire Schorsch to Buy Investors Capital, Hatteras Funds

Newsmaking Schorsch on acquisition, personnel spree

Real estate mogul Nicholas Schorsch continued his newsmaking run on Wednesday, with the announcement that one of his firms, RCS Capital Corp., has filed preliminary paperwork to purchase the independent broker-dealer Investors Capital Corp.

The news comes on the heels of a similar announcement on Monday that RCS would acquire the liquid alternative investment firm Hatteras Funds, as well as the announcement in early September that high-profile Advisor Group president Larry Roth would join Realty Capital Securities, the nontraded REIT broker-dealer and wholesaler arm of RCS Capital, as its CEO.

The announcement states that longtime Investors Capital Corp. president and CEO Tim Murphy and Hatteras Funds founder David Perkins will continue in their leadership roles with their respective firms.

Jon Henschen, president of IBD recruiting firm Henschen & Associates, praised the Investor’s Capital acquisition as a win for the Lynn, Mass.-based firm.

“Investors Capital has been a family culture operation since inception,” he told ThinkAdvisor on Tuesday. “With the purchase of the firm, the family culture will stay intact, but now they will have deep pockets behind them, which is always welcome in a small-spread industry. The terms of the purchase were contingent on staffing and culture to stay intact, so for Investors Capital, this was a win-win.”

Access to capital is a struggle in the independent channel, he added, and the Schorsch purchase “is a smart way to achieve this goal while remaining conflict-free.”

Incorporated in 1995, Investors Capital has 550 registered representatives across the United States.

As for the Hatteras acquisition, deep pockets were also a factor, with Perkins noting in a statement that "We believe that our clients will benefit from immediate access to RCAP's well-capitalized and diverse distribution platform. We are excited to join with RCAP allowing us to continue to develop alternative investment solutions for financial advisors and their clients across the liquidity spectrum."

Schorsch added that "With over $2 billion under management across multiple alternative investment funds, the Hatteras Funds Group manages and distributes 'best of class' liquid alternative investments to what we view as a sophisticated client base.”

Still, RCAP says it has pretty much tapped funds raised from its June IPO, points out Chip Roame, head of Tiburon Strategic Advisors, which could be a signal that its "buying spree is over for now."

Roame says RCAP's latest purchases remind him of the playbook followed by AIG and Advanced Equities as part of their respective growth strategies. "AIG rolled up IBDs, and Advanced Equities bought IBDS and sought specifically to distribute alternative products," he explained in an interview.

In other words, "Larry Roth's move to RCAP is making more sense every day," shared the consultant (who will soon host the fall Tiburon CEO Summit in San Francisco). 

 

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