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Industry Spotlight > Broker Dealers

AssetMark to Be Acquired by Chinese Securities Firm

By Bernice Napach

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AssetMark, a provider of investment, relationship and practice management solutions for advisors, announced Monday that it is being acquired by Chinese securities firm Huatai Securities, which will purchase the firm from its private equity owners Aquiline Capital Partners and Genstar Capital. The transaction is expected to close before the end of the year.

When the deal is completed, AssetMark will become an indirect subsidiary of Huatai, and, according to a company statement, operate as an independent company with the same leadership team, brand sales and service structure and strategy. Asset Mark’s portfolio strategist lineup and its custodian options will also remain unchanged.

In a statement announcing the deal, AssetMark President and CEO Charles Goldman said both companies “share a common belief in delivering outstanding service and innovation solutions to advisors and the investors they serve.”

This is the third sale of AssetMark within the past nine years and the first U.S. investment by Huatai Securities. In 2007, AssetMark was acquired by Genworth Financial and renamed Genworth Wealth Management. Six years later it was sold to Aquiline and Genstar and renamed AssetMark.

AssetMark is 20 years old and has approximately $29.3 billion in assets on its platform, which is used by nearly 7,000 advisors.

In early February, when it reported that AssetMark had retained an independent investment bank to explore a sale, citing “people with knowledge of the deal,” The Wall Street Journal wrote that the firm was generating earnings before interest, taxes, depreciation and amortization of between $60 million and $70 million year to date.

According to a document filed with Chinese financial authorities and provided by an AssetMark spokesman, Huatai International Finance has agreed to pay the cash equivalent of $780 million to acquire AssetMark minus the amount of debt and unpaid transaction expenses, and plus or minus the amount of working capital and amount of cash compared to normalized levels of each. A deposit of $23.4 million representing 3% of the purchase price was placed in escrow. The deal is subject to approval by the by Chinese authorities.

Huatai’s president and executive director, Zhou Yi, in a statement, said, the “transaction is a strategically important” one for Huatai since it is the firm’s first investment in the United States. “We are excited to work with the management team and invest in AssetMark’s growth,” he said, noting that AssetMark will provide Huatai “new and innovative wealth management solutions to our clients.”

Shares of Huatai, which trades on the Shanghai and Hong Kong exchanges, rose 3.58% on Monday but are down 13.4% year to date and off 44.2% compared with a year ago, according to Bloomberg.

— Check out Does Your Advisory Firm Really Have an Answer for the Robo Threat? on ThinkAdvisor.

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