Dynasty Scraps IPO as Schwab, Private Equity Firm Take Stakes

What You Need to Know

Charles Schwab and Boston-based private equity firm Abry Partners are taking unspecified minority stakes in RIA aggregator Dynasty Financial Partners.
Dynasty has withdrawn the IPO registration statement it filed with the SEC in January.
Schwab is custodian for more than half the assets in Dynasty’s network.

Dynasty Financial Partners scrapped its plan to raise $100 million through an initial public offering and instead closed on deals Friday in which Charles Schwab and Boston-based private equity firm Abry Partners have taken unspecified minority stakes in the RIA aggregator, asset management platform and service provider.

Several existing Dynasty investors and directors of its board also invested additional capital in the firm as part of the investment round, while several Dynasty Network firms invested in Dynasty as part of an “equity swap” program that started concurrent with the round, it said.

Most of those clients received Dynasty equity in exchange for their equity in the swap transaction, the firm said. “As a result, the Dynasty Network stands stronger and more aligned than ever, with many members of the network having an equity interest in the success of Dynasty and the Network,” it added.

In January, Dynasty filed a registration statement with the Securities and Exchange Commission for a proposed IPO that would list on the Nasdaq under the symbol DSTY.

Since then, published reports have said Dynasty was seeking other funding alternatives.

On Monday, Dynasty declined to specify how much Schwab and Abry had invested.

Explaining Dynasty’s rationale for its shift in strategy, Shirl Penney, its CEO and president, said in a statement on Friday: “After evaluating the state of the public markets, our board decided to have a handful of conversations with potential private investors.”

He added: “Having been afforded the luxuries of optionality and time, there were two requirements that were atop my list as we went through the process — partnership and alignment.” During that process, “several firms viewed the process in the same light,” he said.

Abry and Schwab will provide a “fresh perspective, industry experience, and institutional expertise that Abry will add to the boardroom,” according to Harvey Golub, Dynasty chairman. He noted that the deal with Schwab was “similar to Envestnet’s strategic investment in Dynasty in 2020.”

Schwab’s minority investment in Dynasty will “further align our commitment to the independent wealth management space,” Golub said. “We will look to revisit the public markets when the timing is right for our business.”

Due to the equity capital raise, Dynasty on Monday withdrew its registration statement on Form S-1, initially filed with the SEC on Jan. 19 and subsequently amended, it said.

Tech Investments Planned

Dynasty plans to use some of the capital it raised in the latest round to “make meaningful investments in technology and technology integrations, the addition of services to its Core Services offering, the further buildout of its TAMP and investment solutions offering, and the addition of intellectual capital and key talent,” it said.

The company also “plans to invest in the growth of Dynasty Capital Strategies, making further equity investments in its network of clients and making capital available for inorganic growth,” it said.

Dynasty also plans to “explore select opportunities for corporate development and M&A that would accelerate growth, add capabilities, and increase margin in various areas of the business,” it said.

An unspecified portion of the investment round “will be used to fund secondary transactions to provide liquidity to long-time shareholders and founders of Dynasty,” it added.