The two asset managers are joining Charles Schwab and Abry Partners as institutional investors in the RIA middle and back-office provider.
By Ian Wenik
BlackRock and JP Morgan Asset Management have agreed to take minority stakes in Dynasty Financial Partners in a transaction that a source with knowledge of the situation told Citywire values the RIA middle and back-office service provider at roughly $800m.
The $800m valuation represents a multiple of roughly 20 times Dynasty’s earnings before interest, taxes, depreciation, and amortization (EBITDA), the source said.
BlackRock and JP Morgan are co-investing in Dynasty through a private fundraising round that includes additional commitments from some of the company’s existing investors, including former American Express chief executive Harvey Golub, family office Glick Family Investments and discount brokerage firm Charles Schwab. The fundraising round closed on September 27.
Dynasty is controlled by its executive leadership, including chief executive Shirl Penney (pictured). Penney declined to specifically comment on financial terms of the capital raise, including how much money Dynasty raised and the size of BlackRock and JP Morgan’s stakes in the company.
‘You have the largest custodian in the industry backing us, the largest asset manager in the world backing us and the largest bank in the world backing us,’ Penney said, referring to Schwab, BlackRock and JP Morgan, respectively. ‘In their swim lane, they’re the dominant player and they’re lining up and backing Dynasty. ‘It’s huge for us, it’s important to them and it’s significant for the industry because it says that the RIA space is the future in terms of asset flows and Dynasty is an incredibly valuable utility to RIAs.’
New York City-based BlackRock had $10.6tn and JP Morgan Asset Management had $3.3tn in assets under management as of the end of the second quarter of 2024. Both companies have a track record of investment in the RIA industry, which is a key market for mutual fund ETF sales.
Both companies are minority investors in turnkey asset management program (Tamp) provider GeoWealth, with BlackRock taking a stake in the $30bn investment outsourcer over the summer. JP Morgan also acquired tax loss-harvesting technology 55ip in 2020.
Dynasty has historically specialized in helping teams of advisors exit wirehouses and private banks and set up their own independent RIAs. The company then provides those independent firms with ongoing support, including marketing assistance, lead generation and access to its Tamp.
There are currently 58 independent RIAs overseeing a combined $100bn in assets affiliated with Dynasty. Dynasty has historically monetized its relationships with RIAs through an ongoing fee, thought the company has in recent years begun to make minority investments in its network firms.
‘We’re raising capital to fund the rapid growth of the business. We’re hiring people pretty much non-stop, given our growth trajectory,’ Penney said. ‘We’re making significant continued investment in technology, which is a combination of integrating technology around the industry as well as the ongoing development of our own proprietary technology stack.’
Penney, a former executive at Salomon Smith Barney and Citi, founded Dynasty in 2010. The company is also minority-backed by RIA technology company Envestnet and private equity firm Abry Partners. Abry invested in Dynasty alongside Schwab in 2022 after Dynasty elected to halt its plans to pursue an IPO on Nasdaq in favor of a private capital raise.
Dynasty’s affiliated investment bank, Dynasty Investment Bank, served as its financial advisor while Sullivan & Cromwell served as the company’s legal counsel.