News broke this week that Stone Point Capital, a Greenwich, Connecticut-based private equity firm specializing in financial services, and GIC, Singapore’s sovereign wealth fund, have reached a deal to acquire Ascensus from its current private equity ownership led by Genstar Capital, Aquiline Capital Partners and Atlas Merchant Capital.
According to the companies’ joint announcement, Genstar and Aquiline will retain a minority stake in Dresher, Pennsylvania-based Ascensus. The transaction is expected to close in the third quarter of 2021.
Asked for his inside take on the deal, Ascensus CEO David Musto tells PLANADVISER that this development is very exciting to participate in, but it is perhaps not the most groundbreaking development for those who closely track retirement industry merger and acquisition (M&A) activity.
“The new partnership is all about strengthening our ability to continue investing in new capabilities, technology and solutions,” Musto says. “In that sense, this development is really the continuation of our existing strategy. It’s not about taking a new direction. It’s about building on the formula that has been working well for our clients, our associates and our partners.”
Musto notes that Ascensus has been in operation for more than 40 years, and it has been through ownership transitions before. Today, through the company’s network of institutional, financial adviser and state partners, Ascensus interacts with more than 12 million savers in a variety of tax-advantaged retirement, education and consumer-directed health savings accounts (HSAs).
“Our new partners clearly share our confidence in the strategic importance and growth potential of the retirement, education and health savings markets,” Musto says. “Like us, they are encouraged by the strong bipartisan consensus that exists with respect to improving the retirement savings system here in the U.S. There are very compelling opportunities for providers like Ascensus in the short, medium and long term.”
In the initial deal announcement, Chuck Davis, CEO of Stone Point Capital, offered the following explanation of his firm’s working vision: “We have followed Ascensus’ success for some time and see tremendous opportunities for further growth and positive impact on the industry. We believe Ascensus is a true leader in providing technology, expertise and partnership to enable savings across the critical areas of retirement, education and health care. We look forward to partnering with their management team and talented associates to support their continued growth, solutions innovation and strong service delivery.”
Yong Cheen Choo, GIC’s chief investment officer (CIO) of private equity, offered a similar take. “Ascensus is delivering industry-leading solutions to help people save for what matters most,” he said. “As a long-term investor, we believe Ascensus’ unique technology, market insights and business knowledge will continue to drive growth and innovation in this space. We are thrilled to grow our yearslong partnership through this increased investment, and look forward to working with Ascensus’ impressive management team over the long term.”
Though he could not share more formal details about GIC and Stone Point’s anticipated ownership time frames or return expectations, Musto says it is clear that this is not going to be a short-term partnership.
“We know that Stone Point and GIC were drawn to us and impressed by the investments we have made in the business for the long term, and they want to expand the leadership positions we have established in various markets,” he explains. “Like us, they believe in the need to provide more people with more savings opportunities—and the need for providers like Ascensus to use our technology and operating service capabilities to solve the big problems of holistic financial wellness.”