Mariner Pursuing $1.02B Debt Raise
Mariner Wealth Advisors has proposed taking on a $1.02 billion first-lien term loan B and a $150 million fungible add-on due in 2030, according to a recent report from S&P Global Ratings. The ratings agency said it expects proceeds from the loan to be used to refinance the RIA’s existing debt (a $1.02 billion term loan B and $150 million second lien term loan). Therefore, the financing would not increase Mariner’s net debt.
The ratings agency assigned ‘B’ ratings to the loans, which it categorizes as high yield, with a recovery rating of ‘3.’ S&P’s recovery rating scale ranges from 1+ to 6, with 1+ representing the highest expected percentage of principal investors might expect to recover if a company defaults. A score of 3 equates to “meaningful recovery” of 50% to 70%.
The analysts consider the transaction to be “leverage neutral.” The RIA’s leverage was at around 6.0x as of Sept. 30, below the downside threshold of 7.0x, but in line with other wealth management firms, including Hightower, Wealthspire, Edelman Financial Engines and Focus Financial.
“The stable outlook reflects our expectation that Mariner’s leverage, as measured by S&P Global Ratings-adjusted debt to EBITDA, will be 5x-7x, and EBITDA interest coverage will be 2x-3x for the next 12 months, while the company continues to expand its assets under management and advisement,” the report said.
A spokeswoman for Mariner declined to comment.
Last month, S&P Global Ratings raised its issuer credit and issue ratings on Mariner to ‘B’ from ‘B-’, with a stable outlook on the company. The analysts said they expect margins to improve as Mariner continues to acquire and scale.
Mariner’s organic growth rate was about 13% this year, according to the November S&P report, but the ratings agency expects acquisitions to be a key driver of growth for the RIA. It has completed 49 deals since 2021. The company had $609 billion in total assets as of the end of September.
Last month, Mariner acquired Defined Financial Planning, a San Rafael, Calif.-based RIA with $164 million in assets under advisement. That deal represented its 22nd office in California and 136th nationwide.
Last year, Mariner announced that Neuberger Berman Capital Solutions and funds managed by Neuberger Berman Private Markets had acquired a minority stake in the RIA, raising $150 million in equity. Leonard Green & Partners, a Los Angeles-based private equity firm that made a minority investment in Mariner in 2021, has retained its stake, and CEO and President Marty Bicknell remains the firm’s majority shareholder.