Asset AllocationOctober 26, 2020

Ontario Teachers’, PE Firm to Acquire Allworth Financial Stake

The $155.3 billion Canadian pension fund and Lightyear Capital bought the stake in the firm from Parthenon Capital.

Reported by Michael Katz

The C$204.7 billion ($155.3 billion) Ontario Teachers’ Pension Plan (OTPP) Board and investment funds affiliated with private equity firm Lightyear Capital have agreed to acquire an undisclosed stake in wealth management firm Allworth Financial. Financial terms of the deal were not disclosed.

The Ontario Teachers’ pension and the Lightyear funds acquired the stake in Allworth from private equity funds managed by Parthenon Capital. The pension said Allworth’s senior management team will still be significant shareholders as part of the deal, which is expected to close in the fourth quarter of this year, subject to customary closing conditions.

Sacramento-based Allworth was founded in 1993 and is a full-service independent investment and financial advisory firm specializing in retirement planning, investment advising, tax planning and preparation, and estate planning for mass affluent customers. Allworth’s assets under management (AUM) have more than quadrupled since 2017 from $2.4 billion to approximately $10 billion.

The pension said the investment will allow Allworth to increase its national footprint through acquisitions and multi-channel direct marketing initiatives.

“We believe the company is an attractive investment given its differentiated and retirement-centric business model, as well as industry tailwinds including an aging population and increased demand for professional and holistic wealth planning services,” Karen Frank, Ontario Teachers’ senior managing director, equities, said in a statement. “As fiduciaries to over 300,000 active and retired teachers in Ontario, we understand the critical role that Allworth and its advisers play in providing quality financial planning solutions to its clients.”

Allworth will become the fifth investment in wealth management by Lightyear’s affiliated investment funds once the deal is completed.

The acquisition is the latest in a recent string of investments made by the Canadian pension giant. Last week, Ontario Teachers’ announced that it led a $360 million investment in Singapore-based Princeton Digital Group, an operator and developer of data centers in Asia. And last month, the pension invested $350 million in performing and distressed private credit in India.