Assured Guaranty, a Bermuda-based holding company, has completed the business combination of Assured Guaranty’s asset management business with Sound Point, becoming a significant equity holder.
As part of the transaction, Assured Guaranty has contributed its entire equity interest in Assured Investment Management LLC and, with certain AHP-related exceptions, its related asset management entities (collectively, AssuredIM) to Sound Point, effective July 1, 2023.
Additionally, the investment agreement under which US insurers Assured Guaranty Municipal Corp. and Assured Guaranty Corp. engaged Sound Point as their sole alternative credit manager to invest $1bn over time in alternative credit strategies managed by Sound Point, is now effective; this amount includes the approximately $400m that was previously managed by AssuredIM.
Assured Guaranty has now become 30% owner of Sound Point’s combined business, which is subject to potential post-closing adjustments.
According to the announcement, with the combination of assets, Sound Point becomes the fifth largest global CLO manager by AUM.
This arrangement was first announced in April. It is expected to significantly benefit both Assured Guaranty and Sound Point, and to be accretive to Assured Guaranty’s shareholders, Dominic Frederico, President and CEO of Assured Guaranty, noted.
“Our investment in Sound Point should provide significant incremental value as we expect the combined business will benefit from Sound Point’s scaled investment platform, as well as both firms’ established distribution channels and well-earned reputations for generating attractive returns for their investors,” said Frederico, who has also joined the Sound Point Board of Managers.
He added: “Our 30% investment in the combined firm advances our earnings diversification strategy through a compelling asset management business that we believe will grow and generate significant net income and free cash flow. We believe that Sound Point’s proven track record managing investments will be strengthened by the addition of AssuredIM.”
