‘Permanent capital’ behind Ironbark’s choice of Merchant in $256m deal

Merchant Wealth Partners’ $255.9 million investment in Ironbark Financial Group, the largest investment the US capital provider has made outside its home market, is a vote of confidence in a market transformed since the Hayne royal commission.

Ironbark managing director and executive chair Chris Larsen says the quality of financial advice has improved sharply since 2018. Increasing wealth makes clients’ needs more complex and the number of advisers remains too low to meet demand, and competition for well-run, corporatised advice practices is intensifying.

“The tailwinds in this industry are terrific,” he says. 

“The super guarantee is only going north, governments keep tinkering with super and tax, including the proposed changes to CGT, and people are getting wealthier as things get more complex. That’s happening at a time when there aren’t enough financial advisers in the industry.”

Merchant manages more than US$300 billion (A$415 billion) globally, and its investment in Ironbark remains subject to Foreign Investment Review Board and Australian Competition and Consumer Commission approval. Its investment in Ironbark will give it a 25.9 per cent stake in the advice, private wealth and investment solutions business.

Since 2024, US private equity firms, global asset managers and offshore roll-ups have all taken stakes in a string of Australian advice and wealth management businesses.

TA Associates took a strategic stake in Viridian Financial Group in 2025, and CC Capital’s $3.3 billion acquisition of Insignia Financial led to the group delisting from the ASX in April this year.

Oaktree Capital’s $240 million investment in AZ NGA in 2024 valued Paul Barrett’s advice and accounting network at around $700 million. US roll-up Focus Financial Partners has also been consolidating its Australian practices, folding Melbourne’s Escala Partners, which manages around $8 billion, into Focus Partners Australia.

Merchant has built other Australian positions, including a joint venture with WT Financial Group, and has taken minority stakes in Coastal Advice Group and Infinity Financial Consultants.

Larsen says scale increasingly distinguishes capital partners, as rising compliance costs and fiduciary obligations demand governance capability that smaller groups struggle to build alone.

“People are saying, we just need help around this space, we need expertise,” Larsen says. “Groups with scale can help you do that.”

An advice firm’s choice of equity partner ultimately comes down to “the lived experience that practice owners want, and there’ll be one Viridian or AZ NGA can offer that we can’t, and one we can”.

Ironbark spent about nine months talking to Merchant, after deciding it wanted a partner to provide what he calls “permanent capital” to complement the investment held by long-term shareholder Soul Patts.

“A feature of Soul Patts is obviously their permanent capital. It means they’re patient, long-term investors, which is different to private equity,” Larsen says.

“I’m not saying one’s right, I’m not saying one’s wrong. But private equity tends to have a shorter timespan. They want to be invested; they want to really crank the business up. And so, a lot of decisions they’ll make are you know over a reasonably short period of time, and then they’ll jump out and move on.

“Permanent capital is quite different. It’s patient capital. It’s long term.”

Globalisation, tech and AI

Larsen says Ironbark also wanted a partner that could deliver globalisation, technology and AI expertise, choosing Merchant, one of a small field of permanent capital providers globally, for its cultural and strategic alignment.

“They get really clear on strategy and execution, and do that over a long period,” Larsen says. “With tech and AI, you need time for those things to play through.”

Ironbark Advice, the group’s wholly owned advice platform run by chief executive Steve Fort, employs more than 125 advisers across 35 locations in Queensland, New South Wales, Victoria, Tasmania, South Australia and the ACT, and buys practices outright with client books typically between $500,000 and $3 million. Ironbark Private Wealth takes clients above $3 million.

Larsen says roughly 70 per cent of the Merchant capital will go to acquisition funding, with the remainder available as secondary capital so existing shareholders can take some cash off the table.

“Some of it might be Ironbark Advice, some of it might be Ironbark Private, some of them might be new equity partnerships that we’re doing, and quite a bit of it will be additional capital our existing partners want.

“We’ve got quite a strong pipeline of practices across all three verticals that we want to execute on over the next 12 months.”

Ironbark has more than $97 billion in funds under advice, management and trusteeship across Ironbark Advice, Ironbark Private Wealth and Ironbark Investment Solutions.

A capability beyond capital

Larsen says acquisition capital is only part of what made Merchant attractive as an investor, and its technology and AI capability will help Ironbark use client data better across the group, and to offer a wider set of services including aged care advice, accounting, risk and mortgage broking.

“If we get better data around our clients’ needs, we can be more predictive and better service them,” Larsen says.

“The feedback we get is that clients want to consolidate the services they need for themselves or their family from a single source. Merchant’s ability in that space, particularly around tech, AI and data, is incredible.”

Larsen also points to Ironbark’s role as responsible entity for its separately managed accounts, which lets it track client exposure in near-real time rather than collating information from multiple sources.

When Bernie Madoff’s ponzi scheme collapsed in late 2008, Larsen was working at Deutsche Bank and he says “it took us a week and a half to figure out our exposure” to the scheme.

“I never want to run an advice group where it takes that long. We should be able to tell clients, in real time, what they’re exposed to.”

Governance and independence

Larsen says combining advice and investment solutions in the one business does not create to the kind of problematic vertical integration, pointing to the Hayne royal commission’s finding that it isn’t inherently a problem, so long as it’s managed properly.

“We use independent asset consultants, Evidentia and Russell are big partners,” Larsen says. 

“We don’t have an internal research team telling advisers which product to use. That’s the Chinese wall that gives our advisers, and their clients, comfort that Ironbark isn’t a group saying, ‘we built this, you must use it.’“

Larsen says the advice profession is moving past the transactional model – a financial plan delivered, investment advice given and the file closed, the way many advisers built their businesses off superannuation rollovers in the past – toward a broader range of services for clients.

“I think the days of, here’s a financial plan, here’s your investment advice, let’s move on to the next one, are gone,” Larsen says.

“Advisers are going to serve their customers more broadly with better services, and we’re certainly going to lead that push.”