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Edelman Financial Engines secures investment from Warburg Pincus valuing firm at USD7.3bn

Independent financial planning and investment firm Edelman Financial Engines, along with lead investor Hellman & Friedman, has announced a strategic investment from Warburg Pincus, a global private equity firm focused on growth investing, which will become a minority equity owner and Michael Martin, Managing Director, will join the Company’s Board of Directors.

The investment values the company at USD7.3 billion and is expected to close in the second quarter 2021.

This recapitalisation marks a significant milestone in fulfilling a vision that has long been in the making for the company and its investors. In 2015, Hellman & Friedman’s investment in legacy Edelman Financial Services helped that firm become the leading independent financial planning and investment advisor in America. That same year, Financial Engines began to combine its technology-based offering in the workplace with a more comprehensive, high-touch and advisor-led approach, and brought Warburg Pincus on as a significant investor as part of that transition. 

In 2018, Hellman & Friedman’s strategic take-private of Financial Engines and merger with Edelman Financial Services accelerated that journey, creating the top independent RIA in America, recognised three years in a row by Barron’s. 

Since the merger, Edelman Financial Engines has continued to expand and enhance its service offering, growing AUM by nearly USD100 billion, while always acting in the best interest of its nearly 1.3 million clients. The Company’s strong financial performance in 2020 demonstrated the strength and resiliency of the firm. With the backing of Hellman & Friedman and Warburg Pincus, the Company enters its next phase of growth grounded in its unwavering mission to bring more financial help to the many that need and deserve it.

“This new investment from Warburg Pincus alongside the continued support from Hellman & Friedman demonstrates the abundance of opportunity ahead for our business,” says Larry Raffone, President & Chief Executive Officer, Edelman Financial Engines. “Our record growth in 2020 created momentum that has continued into 2021. We are well-positioned and excited to take advantage of the opportunities in front us and to fulfil our long-term vision of helping more Americans meet all their financial goals.”

“We are very proud of the progress that the Edelman Financial Engines team has made since we merged Edelman Financial Services with Financial Engines in 2018, creating an unparalleled investment advisory business that provides millions with access to high-quality, unbiased financial planning-led advice,” says Allen Thorpe, Partner, Hellman & Friedman. “We are excited to continue working with Larry and team as they seek to protect and enhance the financial wellbeing of so many Americans, and we look forward to partnering with Michael and the Warburg Pincus team. They bring great expertise in the financial services industry and will be a great addition to the Board as we support the Company’s bright future together.”

“We have a strong history with Edelman Financial Engines and are thrilled by this opportunity to invest in its continued growth in partnership with Hellman & Friedman,” says Michael Martin, Managing Director, Warburg Pincus. “We believe that the Edelman Financial Engines business model, which spans workplace retirement plan advice and traditional financial planning and investment management services, uniquely positions the firm to help millions of Americans reach their financial goals.”

Moelis & Company LLC acted as lead financial advisor to Edelman Financial Engines. PJT Partners also acted as a financial advisor, and Simpson Thacher & Bartlett provided legal counsel. Wachtell, Lipton, Rosen & Katz provided legal counsel to Warburg Pincus.

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