Lightyear Capital Acquires AIG Advisor Group

Industry consolidations and acquisitions aren’t likely to slow in 2016, experts note, and the announced acquisition of AIG Advisor Group by a private equity firm only strengthens the argument. 

Lightyear Capital, probably best known in the retirement plan services industry as a previous owner of the Cetera advisory network, is jumping back into the space with the purchase of AIG Advisor Group.

Retirement plan industry professionals may remember Lightyear Capital’s successful purchase, reformation and eventual sale of Cetera Advisors and related brands to RCS Capital back in 2014—a process that undoubtedly brought nice profits to the firm given the premium $1 billion-plus price tag paid by RCS. Lightyear was further advantaged in the sale in that it played a key role in the original formation of Cetera, following the acquisition of three ING broker/dealers.

Looking into the details of the newly announced acquisition by Lightyear, it appears American International Group, Inc. has agreed to sell AIG Advisor Group “to investment funds affiliated with Lightyear Capital LLC, a private equity firm specializing in financial services investing, and PSP Investments, one of Canada’s largest pension investment managers.” 

The transaction is expected to close in the second quarter of 2016, subject to regulatory approvals. Further terms of the deal were not disclosed, but it’s not very a difficult task to understand Lightyear’s motivations. AIG Advisor Group is already among the largest networks of independent broker/dealers in the United States, with “more than 5,200 independent advisers and more than 800 full-time employees.” Given Lightyear’s recent experience forming Cetera into a profitable and well-respected advisory shop, a related game plan is likely in effect. 

Advisor Group is actually comprised of four underlying broker/dealers, which include FSC Securities Corporation, in Atlanta; Royal Alliance Associates, in New York City; SagePoint Financial, in Phoenix; and Woodbury Financial Services, in Oakdale, Minnesota.

Peter Hancock, president and chief executive officer of AIG, was predictably upbeat about the announced sale, noting that AIG “continues to review its business strategy and take actions to become a more efficient, less complex company.” Hancock says his firm “looks forward to a continued relationship with Advisor Group as an important distributor of AIG products.”

Lightyear Capital, through its three affiliated private equity funds, has now “raised over $2.5 billion of capital and makes primarily control investments in North America-based, middle-market financial services companies.” One of Lightyear’s primary investors, PSP Investments, is “one of Canada’s largest pension investment managers, with CAD $112 billion of assets under management as at March 31, 2015.” It invests funds for the pension plans of the Public Service, the Canadian Forces, the Royal Canadian Mounted Police, and the Reserve Force.

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