More than a year after its initial launch, Constellation Wealth Capital has closed its inaugural fund with more than $1 billion in capital commitments, exceeding its original target.
The 12-year term fund, which began raising capital in August 2023, focuses on providing structured minority investments to wealth management firms across the US, with a goal of supporting growth and preserving firm independence.
For its first venture fund targeting the wealth space, Constellation set its sights on firms managing assets from $2 billion to more than $75 billion. Along with capital, it provides strategic guidance to enhance operations, scale platforms, and support recruitment and acquisitions.
“There is a significant market opportunity to serve as a strategic partner to wealth management firms that are at inflection points in their lifecycles and looking to successfully grow their platforms,” Karl Heckenberg, president and managing partner of Constellation said in a statement Monday. “We believe our deep sector knowledge, experience and ability to provide tailored capital and advisory solutions make us an ideal partner for wealth managers focused on building profitable businesses over the long-term."
Heckenberg, the leading force behind Constellation's August 2023 launch, boasts an extensive career in financial services that includes roles at Merrill Lynch, Wells Fargo, and Charles Schwab. Before launching Constellation, he served as CEO of Emigrant Partners and Fiduciary Network.
The fund has already made eight investments, including significant commitments to prominent firms. In March, Constellation invested $115 million in AlTi Tiedemann Global, followed by an additional $35 million in May to support the firm’s mergers and acquisitions strategy. The firm also acquired minority stakes in Lido Advisors and Perigon Wealth Management in January, as well as a more recent $150 million strategic investment in Cresset Capital Management in November.
Greg Lawton, head of capital formation and investor relations at Constellation, acknowledged how his firm's success has been among the exceptions in the current fundraising environment for PE firms.
“Many firms, particularly those with first time funds, are experiencing how challenging it is to raise meaningful capital from institutional limited partners,” Lawton said. “We are humbled by the support we have received from our investors and proud of the success we have achieved surrounding our first fundraise."
Lawton brings his deep expertise to the firm after serving as co-head of investor relations at Strategic Value Partners. He also led capital development at Crescent Capital Group and worked at Wells Fargo Bank, focusing on institutional relationships and capital markets.
As the Fed gets set to make more interest rate cuts in 2025, PE players are expected to help accelerate the trend of continued consolidation in the RIA space, according to an October report by Echelon Partners. Pat McHugh, head of investments at Constellation, indicated his firm will be all in on that wave.
“The wealth management industry is evolving in what continues to be a complex global market environment," McHugh said. "We believe the firms that we partner with are amongst the best at what they do, and we are looking forward to supporting them as they embark on their next chapters of growth.”
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