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AssetMark IPO Focused on Debt Repayment: CFO

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AssetMark Financial Holdings is looking to use the $275 million it hopes to raise with its initial public offering mainly to pay off debt, Chief Financial Officer Gary Zyla told ThinkAdvisor on Thursday, shortly after the firm’s shares started trading on the New York Stock Exchange under the ticker symbol “AMK.”

AssetMark’s current debt is about $250 million and “we plan to pay down half of that with today’s proceeds,” he said. It’s also keeping its eyes out for additional appealing acquisitions, he noted.

The turnkey asset management provider for independent financial advisors, which was acquired by China’s Huatai Securities Co. about three years ago, on Wednesday announced the pricing of its initial offering of 12.5 million shares of common stock would be $22 per share.

Shares, however, closed at $27.04 on Thursday. The offering was expected to close July 22, subject to customary closing conditions, AssetMark said.

“That’s a nice result,” Zyla said of the initial demand for AssetMark stock, adding the company recently finished a “very positive road show” of the U.S. in which it met with about 150 investors who had a positive reaction to its business model.

The firm’s platform currently serves about 137,000 investor households through about 7,600 advisors, he said, adding: “The types of advisors who would benefit from working with us are advisors who are looking to outsource and scale their business, and those can be either advisors who are affiliated with broker-dealers or they can be independent RIAs or in some cases they’re hybrids.”

AssetMark has been steadily adding to its technology platform, launching WealthBuilder, a goals-based digital advice solution, Smarter Account Setup in 2017 and a portfolio analytics tool, Portfolio Engine, in 2016. Earlier this year, it acquired Global Financial Private Capital, a suite of integrated wealth management services for institutional and individual investors, for about $36 million, adding about $3.7 billion in assets, Zyla said, adding that deal closed in April.

In all, AssetMark has made three acquisitions over the past five years and “all of them have been similar in nature,” he said, noting they’ve been businesses that “look like us, but much smaller.” Although the firm is focused on organic growth, “we do look” regularly for M&As that would make sense when such opportunities arise, he said, adding: “They will happen when they happen. They are not our core business model.” There was, however, “nothing right now” that AssetMark was looking at on that front, he said.

AssetMark is offering 6.25 million shares of the common stock, while the selling stockholder, an affiliate of Huatai Securities Co., is offering another 6.25 million shares of common stock, AssetMark said in its announcement. The selling stockholder also granted the underwriters a 30-day option to buy up to an additional 1.875 million shares of common stock at the IPO price less underwriting discounts and commissions.

AssetMark filed a draft registration statement on Form S-1 with the Securities and Exchange Commission for the IPO in June. At the time, the company said it was looking to raise about $125 million that it expected to use to repay a portion of a $249 million term loan, and for general corporate purposes including working capital, operating expenses and capital expenditures. But AssetMark said at the time that the number of shares to be offered and the price range for the offering hadn’t been determined yet, along with the IPO date.