$36B EP Wealth Issues $400M Loan, $100M Credit Facility

Core Viewpoint - EP Wealth Advisors has successfully secured a $400 million seven-year term loan and a $100 million five-year revolving credit facility, reflecting its financial strength and growth potential [1][2] Financial Overview - The proceeds from the financing will be utilized to pay down existing debt and fund future acquisitions, enhancing the company's financial flexibility and reducing borrowing costs [2] - The company has a total of $36 billion in assets under management as of June 2025 [1] Credit Ratings - S&P Global Ratings assigned a B- credit rating to EP Wealth Advisors with a stable outlook, while Moody's assigned a B2 rating to the firm and its proposed credit facility, also with a stable outlook [2][3] - Both ratings are categorized as "speculative grade" [3] Growth Strategy - EP Wealth has experienced organic net inflows at the higher end of its rated peers since 2017 and has actively acquired smaller wealth managers, although acquired assets under management (AUM) still represent a minority of overall AUM [4] - The company's growth through acquisitions has been more measured compared to peers, resulting in a smaller operating scale [4] Debt Metrics - The transaction will increase the pro forma adjusted debt-to-EBITDA ratio to 4.9x, up from 4.4x for the year ending June 30, 2025 [5] Market Position and Risks - The company has a diverse, relatively young, and long-tenured advisor base with significant ownership in EP, but its earnings are sensitive to financial market conditions and it has limited business diversification due to reliance on the retail wealth channel [6] - EP Wealth's modest market share in a competitive sector necessitates ongoing investment in service offerings and technology to avoid client or advisor attrition, which could negatively impact scale, profitability, and cash flow [6]