Nowadays there are so many investments in which to invest your hard earned cash for
retirement and many companies are vying to manage your money. Ascencus is one of those
businesses, and is now known as the largest independent record keeping services partners
in the USA running $400bn in Assets under management. Ascencus has the combination of
purpose built technology and expertise to enable their partners to help people save
for retirement, education and healthcare. But what is the history behind the business
and why are they planning to IPO in 2021. Here’s How It Happened.
Founded in 1980 as The Barclay Group, the business first provided 401k retirement plan
designs, communication and record keeping services. They now provide administration
for retirement accounts, education savings, health savings and disability related expenses
and is seen as a technology enabled service business. Ascensus now supports more than
12 million savers through tax advantaged accounts and partners with a number of institutional
and wholesale clients across the country. Ascencus is also well known for administering
many state facilitated retirement programs including Illinois and California to offer
the opportunity to save to employees who don’t have access to a workplace retirement
plan.
Ascencus have seen their fair share of mergers and acquisitions including Upromise Investments
in 2013 which gave Ascencus access to the 529 college savings plan industry for the
first time and it’s seen them rise to become the nations number 1 529 program manager,
helping families and students to save for their education as well as launching UGift,
a free service that allows people to give the gift of college savings.
They also acquired Chard Snyder in 2018 to enter the consumer health and benefits administration
marketplace.
But that wasn’t the end of the Acquisitions, after Ascencus themselves were acquired when
JC Flowers PE firm put the business up for sale, by PE firms Genstar Capital and Aquiline
Capital Partners in a $750mn deal. Ascencus attracted PE investors thanks to their ability
to roll up 3rd party administrators of 401k and health savings plans which saw them become
one of the largest record keeping forces in the USA, rivalling investing giants like Fidelity.
However just 3 years later and Genstar and Aquiline put the business up for sale, but
failed to sell Ascensus and were forced to sell a 25% chunk at a far lower valuation
to Atlas Merchant Capital and GIC, the Singapore Sovereign Wealth fund to raise much needed
capital. It saw Genstar and Aquiline turn a short term flip into a long term buy and
hold.
In April 2021 however, Ascensus’s ownership changed again, with Stonepoint Capital along
with GIC, announcing that they’d acquired Ascencus for $3bn, $1bn more than they could
have paid just 2 years prior, a nice payout for investors. But with an IPO rumoured to
be just around the corner at the end of 2021, why wouldn’t Genstar and Aquiline hold out
for an even bigger payday. Well an IPO comes with risks itself which the previous investors
didn’t want to deal with and they felt that it was a good time to sell given the strong
market environment, investment hold time and continued growth opportunity for the next
investor with Aquiline and Genstar remaining minority holders. The cash in hand proved
too sweet and avoids the awkward process of going public and liquidating ownership.
But now through Stonepoint, who know the space well and have been following the growth of
Ascencus for some time, the additional capital can be used to improve the business and drive
innovation to build the brand value and expertise.
With 80,000 defined contribution plans and 1.4mn IRAs under administration with white
labelled software used by the Vanguard Group. Whilst Ascensus have acquired a number of
businesses, they’re yet to get them all working within the Ascencus model to make
the business one streamlined unit rather than many business all working under one umbrella.
They’ve made new hires to get all businesses using the same system to improve economies
of scale.
The IPO which was being thought about by Genstar and Aquiline would have been to raise capital,
so now that this has been achieved, we may no longer see an IPO in the near future, or
the acquisition could help to bring in more resources and leadership to get the company
ship shape to go public. Only time will tell.
At the end of the day, Ascencus has 3 Core Values that matter most to them and mean far
more than any IPO. People Matter. Quality First. Integrity Always. And that’s how
it happened. Thanks for watching.