Financial Engines announced Thursday that it will acquire the big RIA firm The Mutual Fund Store from Warburg Pincus and management in a cash and stock deal valued at $560 million that the companies said expects to close late in the first quarter of 2016. The purchase, the company said in a statement, will include $250 million in cash and 10 million shares of Financial Engines common stock.
The deal will allow Financial Engines to “expand its independent advisory services to 401(k) participants through comprehensive financial planning and the option to meet face-to-face with a dedicated financial advisor at one of more than 125 national location,” meaning The Mutual Fund Store’s retail presences, according to the statement.
When the deal closes, Warburg Pincus is expected to own 12.5% of Financial Engines stock, making it the firm’s largest shareholder. Warburg Pincus Managing Director Michael Martin will join Financial Engines’ board after the closing.
Financial Engines began life as a proto-robo-advisor in 1996, co-founded by Nobel economics prize winner Bill Sharpe, developer of the Sharpe risk-return ratio. It reached maturity as a major provider of investment and related services to retirement plan sponsors and individual participants. It went public in 2010 under the ticker FNGN.
Sharpe remains an emeritus director at the company, along with being an emeritus professor at Stanford University’s graduate school of business. In May, Sharpe was named to the IA 35, Investment Advisor’s 35th anniversary listing of the most influential people in and around the advisory profession.