The UK investment house has bought a majority stake in the wealth management platform business in the US, yet another turn on the M&A carousel.

London-based software and services investment house Hg Capital has bought a majority stake of Riskalyze, the wealth management platform in the US whose clients collectively oversee more than $400 billion of assets. As part of the transaction, Riskalyze co-founder Aaron Klein will reinvest the majority of his holdings into the firm and continue to lead the company as CEO and a member of the board of directors.

Financial terms of the transaction weren’t disclosed. 

The deal shows how the wealth and related technology sectors remain a busy area for mergers and acquisitions. Private equity houses, registered investment advisors, some banks and occasionally multi-family offices are involved as firms seek economies of scale to meet rising client and regulatory demands. (However, MFOs are relatively minor players in this M&A story, for reasons mentioned later in this article.)

Before this recapitalization took place, Riskalyze was growing strongly. In Q2 it logged its highest-performing quarter ever during its 10-year history, the firm said in a statement. The company has added thousands of advisors to the platform in the last 12 months, and has signed enterprise clients such as Cetera, Atria Wealth, and Grove Point. Riskalyze provides advisor clients and wealth managers with risk, portfolio analytics, proposal, trading and compliance solutions.  

And for Hg Capital, the UK organization gets a piece of the action in the US wealth technology space. 

Hg has invested in more than 10 fintech leaders in five years and invested more than $1 billion in the sector to date.  Partnership investments include FE fundinfo, a provider of fund data, analytics and software solutions to asset and wealth managers in Europe. 

“Riskalyze has seen significant momentum in the last few years. The team have successfully established themselves as providing a best-in-class SaaS tool that solves real business challenges in a sector still seeing increasing tech adoption. Riskalyze’s software enables advisors to participate in key trends in wealth management and offer more holistic engagement with their clients,” Max Dewez, director at Hg in New York, said. 

The transaction is subject to customary closing conditions and regulatory approvals and is expected to close before the end of September. Hg’s Sebastien Briens, Max Dewez and Richard Earnshaw will join the board after closing. The company expects to announce additional board appointments soon.

The deals highlight a continued busy trend of mergers and acquisitions in the North American wealth management sector. 

The RIA sector has been a busy area, for example. DeVoe & Company, which tracks M&A deals in the RIA space, said earlier in July that there were 43 deals in the second quarter of this year, the fourth-largest deal-flow figure on record, following 58 transactions in Q1 and 48 in the final three months of 2020. FWR has noted, meanwhile, that the mass of M&A activity seen among registered investment advisors hasn’t yet been mirrored by comparable levels of transactions among multi-family offices. (See an interview here with wealth sector consultant Jamie McLaughlin, who explained in detail why this is the case.) 

Private equity investors, along with asset managers and non-RIA businesses, were involved in 18 merger and acquisition deals in US wealth management in the first half of 2021, DeVoe & Co said.

Within the technology sector associated with wealth management, M&A has also been vigorous, as seen earlier this year when US-based InvestCloud merged with data provider Finantix and Tegra118.