Investcorp announced last week it had taken a majority stake in Berger Financial Group, a Minnesota-based registered investment advisor with more than $3 billion in assets under management. The move was the first for the Bahrain-based alternative investment manager into wealth management, adding to a portfolio of professional services investments across accounting, consulting and talent management.

The investment targets what Vitali Bourchtein, managing director of Investcorp's North American private equity team, described as the mass affluent model. "There's still plenty of opportunity to build something and scale something in the RIA sector, and we were particularly interested in what I would describe as the mass affluent model, where you can profitably serve clients," Bourchtein said.

Bourchtein said his team had been studying the RIA sector for several years and decided to pursue a firm focused on clients with rising affluence and inheritance, whom he said may be underserved by larger platforms. "There's a lot of wealth in this country, a lot of upcoming retirements, a lot of generational transitions, and so there's a really big opportunity to serve this client base," Bourchtein said. "Berger has done that very successfully over a long period of time, and that's what got us really excited about the specific opportunity."

Berger has made more than ten acquisitions, a track record that gave Investcorp a complete picture of what it was looking for in a platform. "They've been acquisitive historically, and we expect to continue doing what they're doing and adding advisors to their platform organically and inorganically," Bourchtein said.

When Investcorp takes majority stakes, the firm is generally an active board member but does not take operational roles or seek to lead management teams. "We let the team continue doing what they're doing and help at a strategic level, help with strategy, help with our network and relationships, help in whatever way we can be helpful," Bourchtein said.

The investment is not a distribution play for Investcorp's alternative products, Bourchtein said, partly because Berger is not focused on the right client base for alternatives. "I know you've seen a lot of the bigger platforms recently buy RIAs and definitely have a distribution angle to it, but that's not our play—at least not with this investment," he said. The distribution aspect was interesting, he said, and he did not rule out such a move in the future.

Investcorp's private equity division manages capital for both institutional investors and the upper-high-net-worth sector. For now, Bourchtein said, the firm will focus on Berger's growth. "We love this sector," Bourchtein said. "I would say in the short term, this is the bet and the platform that we're backing. But it's a really good sector. We're very bullish about it, so we'll continue to explore."