On Friday August 19, 2016, CIFC Asset Management (NASDAQ: CIFC), a large U.S. private debt investment manager, and F.A.B. Partners, an alternative investment platform, announced that F.A.B. will acquire CIFC for approximately $333 million in cash. The transaction, which is subject to approval by the shareholders of CIFC and regulators, is expected to be completed by year’s end. The merger comes just months before the new risk retention rules for collateralized loan obligations (“CLOs”) under Dodd-Frank take effect on December 24, 2016. The new rules require CLO managers to purchase and retain five percent of the fair value of any CLO issued.
In announcing the agreement, Jeffrey S. Serota, chairman of CIFC’s board, declared:
“We are pleased to have reached this agreement with F.A.B., which follows a thorough review of strategic and financial alternatives that generated interest from over a dozen suitors. Our Board concluded that this offer maximizes value for our shareholders and is in the best interests of our investors and clients.”
The deal provides for CIFC shareholders to receive a total of $11.46 in cash per share, of which $11.36 per share will be consideration for the agreement. An additional cash distribution of $0.10 per share declared by the CIFC board will be paid. The deal price of $11.46 is 60 percent above CIFC’s closing share price on August 19, 2016, and represents a premium of about 160 percent over the January 27, 2016, closing share price, the day prior to CIFC’s announcement that it had hired JPMorgan Securities to help it explore a range of strategic alternatives to boost its business.
Private debt or direct lending, which is the provision of loans by non-bank lenders to small- and medium-sized companies, has emerged as a distinct asset class since the credit crisis in 2008. The industry has grown over the past eight years as banks have reduced lending, constrained by new capital requirements. The growing awareness of non-bank lending has given rise to the term ‘shadow banking’.
CIFC is a $14 billion private debt manager specializing in U.S. corporate loan strategies. The company manages a large portfolio of corporate-loan-based CLOs globally. Earlier this year, the firm won the Private Debt Investor’s 2015 Award for CLO Manager of the Year – Americas. CIFC, which is based in New York, also won the 2013 and 2014 awards. CIFC has over 75 employees, including more than 30 dedicated investment professionals, and serves more than 200 institutional investors globally.
For more information, visit www.cifc.com
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