A robust pipeline of investment banking opportunities in clean-tech companies, along with plans for strategic buys of local wealth management firms, is keeping Irvine-based Capstone Financial Group Inc. plenty busy.
The company, whose aim is to make debt investments and arrange equity placements for “small to lower-middle market companies,” is headed by Chief Executive Darin Pastor.
Pastor serves in the same post for the company’s wealth management subsidiary, Capstone Affluent Strategies. He is a financial services veteran who has worked in senior roles at JP Morgan Chase & Co. and Prudential Financial Inc.
Pastor founded Capstone Affluent in October and has been leading its growth so far, including an expansion from Newport Beach into bigger space in Irvine. The shift came amid rounds of new hires for a current total of 65.
Pastor recently oversaw the creation of Capstone Financial as a parent entity over Capstone Affluent, Capstone Merchant Banking and Capstone Investment Banking. The newly structured company is expected to start trading on the over-the-counter bulletin board this week through an acquisition of publicly traded Creative App Solutions Inc. in La Mesa.
Financial information for Capstone Financial was not available, but the company will be “fully reporting” once it starts trading, Pastor said.
Capstone Affluent recently had about $450 million in assets under management.
“Capstone Affluent is the wealth management arm, and that’s where a lot of the press was around before,” Pastor said. “But [investment banking] also is what Capstone Financial Group is doing. That’s a different division.”
Specialty
The firm’s specialty within its investment banking operations is “our understanding of clean tech and industrial growth,” according to Pastor. “Right now we have 20 deals in the pipeline.”
Fifteen are expected to close by the end of this year.
The firm recently provided a couple of million dollars in a first-round funding for a Tucson, Ariz.-based maker of water-purifier and monitoring systems, its first investment banking client.
The Arizona company, which could not be named, serves various industries and “has secured contracts with large, multinational pharmaceutical companies,” according to Pastor.
He said he expects to put in more money in “different tranches,” with the next one coming in between $4 million and $5 million.
Equity Stake
Capstone Financial could take about 1% and up to 3% equity stake in companies it funds.
“It’s essentially debt that’s convertible to equity,” Pastor said. “We’re in the senior position of debt, and there might be a small amount of equity for us.”
Capstone Financial is acquisitive on the wealth management front. It plans to pick up smaller independent managers that have between $1.5 million and $20 million in revenue, with a focus on “strictly retail operations,” Pastor said.
The start of trading on the over-the-counter market is expected to help.
“The main reason Capstone Financial Group decided to go public is for strategic acquisitions,” Pastor said. “The company aims to acquire investment banking and advisory services in and around Southern California.”
