Assured Guaranty to acquire asset management firm BlueMountain for $160m
Bermuda-based Assured Guaranty has entered into an agreement to purchase all of the outstanding equity interests in BlueMountain Capital Management and its associated entities for approximately $160 million.
The company's president and CEO Dominic Frederico described the deal as its "largest and most important investment" outside the financial guaranty sector, which is expected to "make a material contribution to Assured Guaranty’s profitability".
BlueMountain is an alternative asset management firm with $19.3 billion in assets under management (AUM). As part of the agreement, BlueMountain’s co-founder, chief executive officer and chief investment officer Andrew Feldstein will join Assured Guaranty as chief investment officer and head of asset management, which will include his current roles at BlueMountain.
The acquisition is expected to be completed in the fourth quarter of 2019. At least $114.8 million of the approximately $160 million purchase price will be payable in cash. The remainder is payable, at Assured Guaranty’s election, in cash, its common shares, a one-year promissory note, or in a combination of the foregoing. Assured Guaranty US Holdings (AGUS) intends to fund the acquisition with loans from its financial guaranty subsidiaries.
“We have been searching for the right asset management platform for over three years, and we found it in BlueMountain, a seasoned asset management firm with a compatible credit culture, complementary market knowledge and the scale to make a material contribution to Assured Guaranty’s profitability,” said Frederico.
“BlueMountain will be our largest and most important investment outside the financial guaranty sector. We expect to allocate a portion of our financial guaranty subsidiaries’ investment portfolios to be managed by our new asset management platform and believe that will drive improvement in our overall investment returns, which should raise the future level of insurance subsidiary permitted dividends," he added.
"The acquisition is consistent with our strategic objective to diversify into fee-based revenue sources, and we expect this platform to be the basis for further development of our presence in the asset management sector. We are delighted that Andrew Feldstein will join Assured Guaranty to execute this strategy.”
Feldstein said: “Along with other senior executives of BlueMountain, I enthusiastically look forward to joining Assured Guaranty’s team and leading Assured Guaranty’s asset management initiatives. Assured Guaranty is a well-capitalised, credit-focused financial services group that believes in BlueMountain’s strength and long-term prospects, and it sees alternative asset management as a key element of its long-term strategy. Assured Guaranty’s asset management business will capitalise on the many synergies between the companies, including BlueMountain’s significant experience in CLOs, asset securitization, infrastructure investments and health care finance.”
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