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Industry Spotlight > Broker Dealers

PE Firm to Buy Financial Compliance Outsourcer

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Private-equity firm Lovell Minnick Partners says it has inked a deal to buy a majority stake in Foreside Financial Group, a third-party provider of compliance and distribution services to broker-dealers and investment advisors.

Foreside is based in Portland, Maine, but has offices in Pennsylvania, Massachusetts and Ohio. It currently distributes more than $800 billion of products through BDs and advisors.

“As one of the most respected outsourced service providers in the asset management industry, Foreside is uniquely positioned to help clients navigate the changing financial and regulatory landscape,” said Spencer Hoffman, a partner at Lovell Minnick, in a statement. “We look forward to working closely with … [the members of] Foreside’s strong management team as they execute their strategy to grow the business and to further broaden the scope of services they provide.”

For its part, Lovell Minnick has raised about $1.7 billion. In 2015, it used some of this capital to buy a minority stake in Lincoln Investment Planning, which has about 800 advisors; it also sold its stake in the tax-focused broker-dealer HD Vest to Blucora for about $580 million.

According to the PE firm, demand for Foreside’s services should keeping growing given the financial industry’s “increasing and costly fund compliance requirements, growing risk management needs, new fund launches, AUM growth and greater cross-border investment activity.”

“Our relationship with Lovell Minnick goes back many years, and we share a strategic vision to achieve greater scale in our core distribution and compliance services for investment managers and their funds, both in the U.S. and offshore markets,” said Foreside CEO Richard Berthy, in a statement.

Lovell Minnick says that business opportunities for outsourced fund and compliance services are “compelling.” It also holds ownership stakes in some Foreside clients, such as 361 Capital, Chartwell Investment Partners and Matthews International Capital Management.

The transaction is expected to close in the second quarter.

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