The private equity firms’ stakes in Pathstone are part of a broader trend of such money entering the wealth management space.

Private equity house Kelso & Co has taken a stake in US-family office firm Pathstone, highlighting a trend of such investors backing these wealth managers. Lovell Minnick Partners has also invested in the business since 2019.

Kelso's and LMP's respective investments, which are expected to close during the second quarter of 2023, are subject to customary closing conditions, a statement from Pathstone said yesterday.

Ardea Partners LP served as the exclusive financial advisor, and Alston & Bird LLP served as the legal advisor to Pathstone. Kirkland & Ellis LLP and Republic Capital Group advised LMP. William Blair & Co provided financial advice, and Debevoise & Plimpton LLP served as the legal advisor to Kelso.

Pathstone has more than 350 staff and more than 180 of that number own shares in the business. It oversees more than $80 billion in assets, in 17 offices. It has grown via M&A and organic routes. In late February, for example, Pathstone agreed to buy Rex Capital Advisors, a firm that is based in Providence, Rhode Island.

Rex Capital has about $1.5 billion in assets; in December 2022, it combined with Willow Street, a Wyoming-based trust and fiduciary services firm, founded in 2005. In March 2021, it joined up with RIA firm Cornerstone Capital Group. Cornerstone has expertise in sustainable and impact investing, adding to Pathstone’s work in this area.

The private equity firms’ stakes in Pathstone are part of a broader trend of such money entering the wealth management space, seeking to tap into the multi-trillion-dollar transfer of assets as the Baby Boom generation passes on. Some firms are also going private – most notably Focus Financial.

"As Pathstone's differentiated position as "The Family Office" continues to resonate across our industry and propels our exciting trajectory, we have found in Kelso another investment partner who aligns with our values as a consistent champion of founder-led firms with employee ownership," Matt Fleissig, CEO of Pathstone, said.

"Their partnership will provide capital to further support our culture of growth and innovation, as well as resources and expertise to enable us to accelerate our strategic initiatives and deliver upon the multi-generational promise we make to our clients and employees alike."