Global investment firm Stanhope Capital Group and FWM Holdings, owner of Forbes Family Trust, LGL Partners and Optima Fund Management, have entered into a definitive merger agreement to create a $24.2 billion independent wealth management and advisory firm, the companies announced today.
The merger is expected to close in next year’s first quarter, pending customary closing conditions. According to a press release, Stanhope Capital and FWM will operate as a single company—particularly within investment research and strategy—but will retain their respective names under the Stanhope Capital Group umbrella.
The combined company, with 135 employees and six offices on two continents, expands its footprint in the U.S. and Europe with an enhanced global investment team leveraging its capabilities across multiple asset classes, including listed equities and alternatives such as private equity, real estate and hedge funds, the press release said.
London-based Stanhope was founded in 2004 by Franco-British financier Daniel Pinto and oversees $13 billion for private clients, endowments, charities and other institutions across the globe. The firm employs 85 people from its offices in London, Geneva and Paris, and is active in wealth management, investment consulting, private investments and merchant banking.
Pinto will serve as chairman and CEO of the combined group.
FWM, which oversees $11.2 billion and employs 50 people, was founded in 2009 by Keith Bloomfield. Operating primarily in the U.S. from offices in New York City, Philadelphia and Palm Beach, Fla., it serves ultra-high-net-worth family offices and individuals, foundations and endowments. In addition to its wealth management activities, FWM is known for its expertise in alternative assets. It acquired New York-based hedge fund specialist Optima Fund Management in 2019, the press release noted.
Bloomfield will continue as CEO of FWM and oversee the firm’s U.S. businesses. In the press release announcing the deal, he said the merger will increase the combined entity’s geographic scope and enhance its investment capabilities in both public and private markets.
The press release noted that Bloomfield will join Stanhope Capital’s board of directors as vice chairman, and will also be on the executive committee. He will be joined on the board by Thomas H. Lee, the private equity pioneer. Jonathan Bell, Stanhope’s chief investment officer and a member of the board, will become vice chairman, and P. Scott Gregorchuk, founder of LGL Partners, will continue as vice chairman of FWM.
Bloomfield, in an interview with Financial Advisor, said that the two firms shared philosophies about handling client investments and going up against the private banks, which the firms say pose numerous conflicts of interest when handling the accounts of the wealthy. The merger allows the two firms to beef up their investment offerings, creating more access to the kinds of alternatives opportunities like venture capital, real estate and private equity that are catnip to high-net-worth individuals.
“It’s coming at a good time when there’s tremendous uncertainty in the marketplace and in general, given what 2020 has brought to the globe,” Bloomfield said. “We have clients coming to us for more advice more often.” One of the things they desire is more yield in a low interest rate environment. Some clients, he said, had a difficult year because their liquidity event plans got rained on: Anyone who wanted to pull money out of their businesses ahead of possible capital gains tax increases in 2021 saw those plans crimped by the market swoons caused by the coronavirus pandemic.
Stanhope also saw increased investment opportunities in a merger, Bloomfield said.
“A lot of wealth management firms outside of the U.S. invest about 50-plus percent of their clients’ portfolio in the U.S. So [Stanhope’s] ability to access our investment engine here, which I will say is one of the best, is very additive to their clients’ portfolios. And they’ll be able to leverage off of all the work we’ve done over here to populate those portfolios with U.S. investments.”
The combined power of the firm will beef up client investment opportunities.
“If you think about it,” Bloomfield said, “you have doubled the amount of boots on the ground in different locations that have relationships on the street with managers and other advisors and people they went to business school with, etc., etc.”
For example, he said, Stanhope recently shared a German real estate fund opportunity with FWM. The Forbes’ side has created a fund-of-funds in health care concentrated portfolio of biotech and health care over the last eight months.
Bloomfield said FWM’s portfolios allocate 20% to 25% on average to alternative investments as a bucket. He says that Stanhope’s offering is similar.
FWM managers got shares of Stanhope as part of the deal. Wealth Partners Capital Group, a Palm Beach private equity firm that invested in FWM in 2017, has sold its stake in the the firm. Sewell & Kissel represented FWM Holdings in the transaction.
