AIG Advisor Group may finally have a buyer

With discussions regarding the sale of the AIG Advisor Group dragging on for months, representatives and financial advisers who are affiliated with the beleaguered broker-dealers of the firm are relieved now that two final bidders have emerged. Two private-equity firms, Light-year Capital LLC and Lovell Minnick Partners LLC, with strong ties to retail broker-dealers, are in the race for the AIG Advisor Group, a network of broker-dealers that houses about 6,000 independent registered reps and investment advisers. A winner could be announced in the next few weeks, sources said. The price that the AIG Advisor Group would command isn't clear. The most recent rounds of negotiations came in the late winter and early spring, with several potential buyers supposedly having interest. At that time, several sources acknowledged that the price tag being bandied about for the three AIG broker-dealers ranged from $200 million to $300 million. The talks started in the weeks after parent company American International Group Inc. of New York collapsed in September and was bailed out by the federal government. Since then, AIG has been selling assets as part of a restructuring. Among advisers, “the sense is, finally, something is going to happen,” said Jonathan Henschen, president of Henschen & Associates LLC, a recruitment firm in Marine on St. Croix, Minn.

WAITING FOR ANSWERS

AIG advisers, however, still are waiting for answers to important questions, he said. “They want to know how this will affect [them],” Mr. Henschen said. They particularly want to know if a retention bonus will come as part of an acquisition, he said. They also have questions as to whether the back offices at the three broker--dealers will be merged, Mr. Henschen said. Combined, the AIG Advisor Group broker-dealers, FSC Securities Corp. of Atlanta, Royal Alliance Associates Inc. of New York and SagePoint Financial Inc. of Phoenix, formerly AIG Financial Advisors, produced $1.1 billion in revenue last year. That made the AIG Advisor Group the second-largest network of independent broker-dealers based on revenue. New York-based Lightyear Capital's chairman and chief executive, Donald B. Marron, is the former head of Paine Webber Group Inc. of New York. That firm, of course, was one of Wall Street's leading retail broker-dealers when it was acquired by UBS AG of Zurich, Switzerland, in 2000. Jeffrey D. Lovell, the chairman and CEO of Lovell Minnick Partners of Los Angeles and Philadelphia, was one of the co-founders of Putnam Lovell Securities, now Jefferies Putnam Lovell in New York. Included in Lovell Minnick's portfolio of companies is PlanMember Financial Corp. of Carpinteria, Calif., the parent of PlanMember Securities Corp., an independent broker-dealer with about 350 reps and advisers.
“I am very optimistic. I'd be thrilled if either firm owns us,” said Rita Robbins, president of Invescor Advisory Services of New York, which is affiliated with Royal Alliance. Her firm, with 66 advisers, is one of the largest with Royal Alliance, but she declined to state the assets under management. Ms. Robbins pointed to the leadership and expertise at both Lightyear Capital and Lovell Minnick as clear strengths. She also noted that neither private-equity firm is in the business of creating financial services products, thus eliminating any potential conflict from having a parent company that would attempt to push products through advisers. A spokeswoman for Lightyear Capital, Amanda Kiely, said the firm would have no comment. A spokes-man for Lovell Minnick did not return a call to comment. Linda Skolnick, a spokeswoman for the AIG Advisor Group, said the network's CEO, Larry Roth, was not available to comment. E-mail Bruce Kelly at bkelly@investmentnews.com.