Man Group is to acquire Silvermine Capital Management, a Connecticut-based leveraged loan manager with USD3.8 billion of funds under management across nine active collateralised loan obligation (“CLO”) structures as of 30 November 2014.
The Acquisition is expected to complete in the first quarter of 2015, subject to certain approvals being obtained.
Silvermine is wholly-owned by the firm’s founders and senior staff members and is based in Stamford, Connecticut. The team of 17 focuses exclusively on managing US levered credit portfolios and, since inception in 2005, has executed 16 separate transactions totalling USD6.7 billion.
Upon completion of the Acquisition, Silvermine will be integrated into Man GLG and will operate under the Man GLG Silvermine name which will complement Man GLG’s existing credit business. Silvermine’s team will remain in place under the leadership of two of the firm’s founders, G Steven Kalin and Richard F Kurth, who will continue to work alongside the other co-founders Aaron Meyer and Jonathan Marks.
The Acquisition follows Man Group’s recent acquisitions in the US of Pine Grove Asset Management LLC, Numeric Holdings LLC and the Merrill Lynch Alternative Investments LLC fund of hedge fund portfolio.
Man will make an upfront payment of USD23.5 million, paid in cash from existing resources upon completion of the transaction. Two earn out payments, payable following the first and fifth anniversary of closing, will then be made on a sliding scale dependent on levels of run rate management fees at the time.
After one year, Man will also pay up to USD16.5 million, and after five years, up to USD30 million.
The earn out payments are expected to be paid in cash, also funded from Man Group’s resources at the time; however Man Group has retained the right to, at its discretion, issue ordinary shares at the then prevailing market price in order to satisfy some or all of the consideration payable.
The regulatory capital requirement associated with the Acquisition is expected to be approximately USD45 million. As of 30 November 2014, Silvermine’s run rate management fee revenues and PBT were USD17 million and USD8 million respectively, based on USD3.8 billion in funds under management.
Mark Jones, co-CEO of Man GLG, says: “The acquisition of Silvermine will transform our existing credit business and position us to benefit from strong demand for US CLOs and other credit strategies. Silvermine is a highly respected, specialised business with an excellent track record of outperformance. As part of Man Group, Silvermine will benefit from our world class infrastructure, distribution and access to capital and we are confident that this acquisition will bring meaningful advantages to our investors by further diversifying our offering.”
Steven Kalin and Richard Kurth, Managing Directors of Silvermine, says: “We’re excited about the opportunities that joining Man Group will bring to us and to our investors. We have always been focused on identifying opportunities in the credit space that, given their risk/return proposition, deliver attractive performance for our clients. We are pleased to be joining forces with an organisation that not only embraces our firm’s entrepreneurial spirit, but plans to help foster that spirit and collaborate with us to further grow the business."