Venture firm takes a large minority stake in ultra-high-net-worth advisory. Vulcan Capital, the private-investment arm of Microsoft co-founder Paul Allen's holding company, has purchased a "significant" minority equity interest in multifamily office Silvercrest Asset Management.

By one account Vulcan has purchased a 30% stake in Silvercrest. There's no word on the price it has agreed to pay for the stake, whatever its precise size. Silvercrest's principals continue to own the majority of the of the firm's equity.

Scarcity amid plenty

"We foresee that Vulcan Capital's deep resources and relationships, long-term perspective and financial acumen will be highly valuable to us in the years ahead as we continue to build an exceptional wealth-management firm," says Silvercrest's co-founder and CEO Moffett Cochran.

New York-based Silvercrest, which manages around $8 billion, was the ninth-biggest multifamily office in the U.S. by assets under administration in 2005, according to the Family Wealth Alliance, a Wheaton, Ill.-based consultancy to high-net-worth families.

Vulcan managing director David Capobianco says Silvercrest is a good investment for two reasons.

First, the high-net-worth advisory space is poised for rapid growth "based on favorable demographic trends and the unprecedented liquidity generated over the last five years." Second, there's a dearth of qualified professionals serving these clients -- a factor that favors Silvercrest, a firm with "a world-class management team with a long and distinguished track record of success," he adds.

Vulcan isn't alone among private-equity firms in seeing boutique advisories as a fair place to park money. Last month New York-based Inter-Atlantic Group acquired an undisclosed stake in Houston-based US Fiduciary. Late in 2006 New York-based private-equity firm Circle Peak Capital recapitalized Wealth Trust, a Nashville-based investment-advisory holding company. Earlier last year Summit PartnersSummit Partners, yet another New York-based venture firm, put $35 million in Focus Financial Partners.

Wealth managers raised about $400 billion from private-equity firms in 2006, according to New York-based investment bank Berkshire Capital. In 2005 wealth-management firms got $283 billion in private-equity funding. -FWR

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