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Sanctuary Gets $175 Million Investment From Kennedy Lewis Investment Management

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Since its founding in 2018, Sanctuary Wealth Group has been aggressively recruiting wirehouse breakaways and diving into acquisitions. That has pushed the firm’s footprint to 26 states. Now, Sanctuary’s got an even bigger war chest to fuel its ambitions.

The Indianapolis-based firm says it has received a $175 million investment from Kennedy Lewis Investment Management, a New York-based financial-services and credit management firm. 

Sanctuary CEO Jim Dickson

Photo Illustration by Barron’s Advisor; Courtesy of Sanctuary Wealth

“We have both these onramps, the breakaways and M&A, that have great demand,” says Sanctuary CEO Jim Dickson. “But to meet the demand, we need capital.”

Dickson declined to say what Sanctuary was valued at. It’s the second capital infusion the firm has received. In 2020, Sanctuary sold a $50 million stake to Italian wealth and asset management firm Azimut Group, using the funds to accelerate its growth.

Sanctuary specializes in helping advisors break away from the nation’s largest brokerage firms, such as Merrill Lynch, where Dickson once served as an executive. Breakaway advisors affiliate with Sanctuary but maintain their own practices. The firm currently has 79 partner firms with approximately $25 billion in assets under advisement, according to Sanctuary. In addition to helping breakaways set up shop, Sanctuary offers other services such as a turnkey asset management program.

“Our partner firms [and advisors] look for solutions, like family office services, tax and accounting solutions, and private investments,” Dickson says. “Within Sanctuary, we have built these businesses to support our partner firms. As we look forward, we see opportunities to build out these services.”

Dickson says he has known Kennedy Lewis co-founder David K. Chene for some time. “As we were thinking about our next moves, I reached out to David to talk about what Sanctuary should do,” Dickson says. That conversation led eventually to Kennedy Lewis’ investment in Sanctuary.

Chene points to Sanctuary’s potential for growth within the fragmented wealth management sector as a reason for his firm’s investment. “This is an exciting opportunity for Kennedy Lewis to invest behind an innovative platform as it embarks on the next stage of growth,” Chene says in a statement.

Merger and acquisition activity in the registered independent advisor sector has been red hot. A record 181 deals were announced in the first half of 2022, according to Echelon Partners, a consulting firm. The explosion of deal-making is due to aging baby boomer advisors looking to retire as well as other advisors seeking to gain greater scale through acquisitions.

Sanctuary has sought to tap into that by offering to provide capital to its partner firms in exchange for a minority stake. The firm also assists independent advisors nearing retirement by essentially playing matchmaker, pairing a retiring advisor with a successor within Sanctuary’s network.

A stream of large wirehouse advisor teams has opted to go independent with Sanctuary. Last month, the firm picked up a group of former Merrill Lynch advisors who collectively managed $1.2 billion in Short Hills, N.J. In April, a Paramus, N.J.-based team that managed $850 million left UBS to sign with Sanctuary.

Dickson says Sanctuary will keep up the recruiting pace, but also that he sees additional growth opportunities among advisors who are already independent. 

“We’re staying in the breakaway business. It’s a great business,” he says. “But M&A is a real opportunity because of the baby boomers retiring.”

Sanctuary has also expanded in other ways. Earlier this month, the firm said it bought a stake in GoalPath Solutions, an Overland Park, Kan.-based retirement plan consultant and financial wellness firm. In 2021, Sanctuary bought a minority stake in InnoVise Family Wealth Advisors to bring family office services to Sanctuary’s network of advisors.

Write to Andrew Welsch at andrew.welsch@barrons.com