On Friday, First Republic Investment Management Inc., a
wholly-owned subsidiary of
First Republic Bank
), announced the acquisition of California-based Luminous Capital
Holdings, LLC, an SEC-registered investment adviser (RIA).
Financial terms of the deal were not disclosed.
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The acquisition by First Republic Bank demonstrates its aim of
providing exceptional services to its clients with the purchase
of such a flourishing wealth management firm. Subject to certain
customary conditions, the transaction is anticipated to be closed
by December 31, 2012.
As per the terms of the cash-deal, six partners of Luminous
Capital will enter into long-term employment contracts. Moreover,
First Republic Bank will acquire all of the assets of Luminous
Capital and expects the transaction to be moderately accretive to
Keefe, Bruyette & Woods, a unit of
) and the law firm of Paul Hastings, LLP acted as advisors to
Luminous Capital. Moreover, Silver Lane Advisors and the law firm
of Arnold & Porter, LLP served as advisors to First Republic
Luminous Capital, which provides wealth management advices to
high net worth clients, family offices and family foundations,
has offices in Portola Valley on the San Francisco Peninsula and
in Century City. Moreover, the firm serves the same markets as
First Republic Bank and possesses about $5.5 billion of wealth
After-Effects of the Deal
Having strengthened its foothold over the years, First Republic
Bank commands a strong presence in California. Therefore, with
the acquisition of Luminous Capital, the company will expand
further with the help of the acquired firm's wealth management
brand and proficiency. Additionally, wealth management assets of
First Republic Bank will be enhanced by $5.5 billion.
With the aim of providing a wide array of banking services to its
clients, First Republic Bank has become enthusiastic in making
acquisitions and preparing a platform for growth. Moreover, this
acquisition is significant of the company's efforts towards
providing quality investment services and advice to clients.
On the other hand, the deal widens Luminous Capital's scope and
will help its expansion efforts with the commitment of providing
investment decisions to its clients. Overall, the clients of
Luminous Capital will have access to the additional services and
products provided by First Republic Bank, while the company will
take advantage of Luminous Capital's investment management
The acquisitions of such asset management companies are welcome
as they play a major role in preserving investor confidence in
We also believe that First Republic Bank's diverse revenue stream
and sturdy capital position augur well for investors. Capital
deployment efforts also bode well and boost investors'
confidence. Yet, the unsettled economic environment, low interest
rate and stringent regulatory issues are matters of concern.
First Republic Bank currently retains its Zacks #2 Rank, which
translates into a short-term Buy rating.