Bain, Reverence to acquire Envestnet in $4.5B deal

Dive Brief:

Wealth technology platform Envestnet has agreed to be acquired by Bain Capital and Reverence Capital in a take-private transaction valued at $4.5 billion, the firm announced Thursday.
Under the terms of the deal — approved by Envestnet’s board — the company’s shareholders will receive $63.15 in cash for each share of common stock they own.
The deal is expected to close in the fourth quarter, after approvals by regulators and Envestnet’s shareholders.

Dive Insight:

BlackRock, Fidelity, Franklin Templeton and State Street Global Advisors are among the partners who will hold minority positions in Envestnet after the deal closes.

Bain Capital's acquisition will be financed with about $2 billion in debt, two people familiar with the matter told the Financial Times. Royal Bank of Canada, BMO, Barclays and Goldman Sachs will contribute to the financing package, and a consortium of private-credit lenders, led by Ares, Blue Owl and Benefit Street Partners, will also provide debt financing.

“This is a validation of Envestnet's proven ability to operate at market-leading scale — serving more assets, accounts and advisors and effectively connecting our company and our technology," Tom Sipp, Envestnet’s executive vice president of business lines, said in a statement Thursday.

Berwyn, Pennsylvania-based Envestnet manages more than $6 trillion in assets and oversees roughly 20 million accounts with more than 109,000 advisers working on its platform. The company offers software and data to wealth management and financial institutions through integrated technology for 17 of the largest U.S. banks and 48 of the 50 largest wealth management and brokerage companies, it said.

“Through its deeply connected ecosystem and innovative technology and data capabilities, Envestnet has built an industry-leading platform that the largest wealth management firms, [registered investment advisers] and broker-dealers rely on to power their businesses,” Phil Loughlin, a partner at Bain Capital, said in a statement Thursday.

Milton Berlinski, co-founder and managing partner at Reverence Capital Partners, which has about $10 billion in assets under management, said Envestnet's significant market presence, combined with favorable sector dynamics, creates a strong foundation for future expansion.

Envestnet has been looking to offload data aggregator firm Yodlee, which it bought in 2015 for roughly $590 million, Bloomberg reported in December. More recently, Envestnet has searched for a potential buyer of the whole company and hired various investment banks to advise on Yodlee and company sales. Advent International and GTCR were eyeing a deal with Envestnet, Bloomberg reported in May, citing people familiar with the matter.

Envestnet has been up for sale before. The firm’s co-founder and CEO, Jud Bergman, died in a car crash in 2019. Bill Crager, Envestnet’s other co-founder, then took the firm’s leadership role.

Crager stepped down in March but remained in the company as a senior adviser. Envestnet then named Jim Fox to lead the company.

In another recent C-suite move, Envestnet tapped BlackRock alum Joshua Warren as its CFO following Pete D’Arrigo’s exit in September.

Warren assumed the responsibility while Envestnet was battling economic challenges, including “stubbornly low net industry asset flows, a headwind that’s carried over from 2022,” Crager said last year during an earnings call.

“We look forward to working with Envestnet's talented and experienced leadership team and supporting their growth strategy through organic and inorganic initiatives, making further investments in its differentiated product offering, and delivering enhanced value to customers and partners,” Marvin Larbi-Yeboa, a partner at Bain Capital, said in a statement. The investment firm has about $185 billion in assets under management.

Envestnet plans to invest in its platform to make it more customized and connected with its clients, Sipp said.

“As a private company, we can accelerate our ability to further elevate our market-leading platform with greater functionality and an even broader solution set that enables advisors to better serve clients at all stages of their financial life,” Sipp said Thursday.