Assured Guaranty, the financial guaranty insurer, has announced that its subsidiary, Assured Guaranty US Holdings Inc. (AGUS), has completed the acquisition of alternative asset management firm BlueMountain Capital Management, LLC.
The deal closed on substantially the same terms as when it was originally announced in August 2019, for a purchase price of approximately $160 million, paid in cash.
Of this figure, $3 million is being withheld and will be paid if a particular consent is received within the two months following the closing.
As part of the takeover, BlueMountain co-founder Andrew Feldstein has joined Assured Guaranty as Chief Investment Officer and Head of Asset Management.
He will also continue in his roles as Chief Executive Officer (CEO) and Chief Investment Officer of BlueMountain.
Feldstein has separately agreed to purchase $22.5 million of Assured Guaranty common shares during the course of the next two months to evidence his commitment to the company.
“This transformative transaction combines two culturally compatible companies that have complementary strengths,” said Assured Guaranty President and CEO Dominic Frederico.
“We expect it to significantly benefit Assured Guaranty’s shareholders and policyholders by furthering our goal of leveraging our capital through business diversification while continuing our share repurchase program and supporting growth at BlueMountain,” he explained.
“Assured Guaranty is now not only the world’s leading financial guarantor but also, through BlueMountain, a respected alternative asset manager with a highly ranked position in the collateralized loan obligation (CLO) market.”
Frederico continued: “BlueMountain diversifies Assured Guaranty’s business profile by providing a fee-based revenue source to complement our risk-based premium revenues, and gives us an in-house platform to generate improved investment returns that may unlock greater dividend potential for our insurance companies.”
“At the same time, Assured Guaranty is supporting BlueMountain’s growth through an infusion of working capital and an allocation of our investment portfolio to BlueMountain-managed investment vehicles.”
Feldstein also commented: “By becoming a member company of the Assured Guaranty group, BlueMountain has gained greater financial stability and duration of capital, along with access to the experience and strategic outlook of the long-time leader in its credit-intensive market.”
“We intend to expand Assured Guaranty’s asset management capabilities and to make the most of the synergies inherent in our companies’ mutual strengths in credit, asset-backed finance, infrastructure and healthcare,” he added.
Goldman Sachs & Co. LLC and Greensledge Capital Markets LLC served as financial advisors to Assured Guaranty for this transaction, and Mayer Brown LLP acted as legal advisor.
Meanwhile, Barclays Capital Inc. served as financial advisor to BlueMountain, and Purrington Moody Weil LLP acted as legal advisor.
