On Wednesday, ifa reported that Fitzpatricks has secured capital funding from two Australian private equity outfits, Quadrant Private Equity and Yorkway Capital Partners.
Fitzpatricks chief executive John McMurdo said the capital injection will help the licensee, which currently has 75 advisers, reach more Australians for financial advice.
Commenting on the deal, Forte Asset Solutions managing director Steve Prendeville said Fitzpatricks reflects a number of attributes that investors and purchasers find attractive in the current climate.
“I nominated 12 months ago we would witness significant consolidation and participation in mid-sized dealer groups,” Mr Prendeville said. “In the last few months we have seen Beacon Group merge with Libertas, Easton Investments Limited acquire GPS Wealth and now Fitzpatricks has attracted Australian private equity investment.
“What they all have in common is they are all quality groups who will be recipients of growth from adviser migration and in-house asset management. With growth comes the need for capital.”
Mr Prendeville said he expects to see more deal activity in the mid-tier licensee market.
The increasing role of private equity in the dealer group market is one of a number of topics Mr Prendeville discussed for an episode of The ifa Show recorded earlier this year:
Private equity is shrewd and given the end to rebates, volume deals and a focus on related party transactions (vertical integration), it’s a curious one as to how private equity can make it work where other mid sized groups can’t.