Affiliated Managers Group, West Palm Beach, Fla., has entered into an agreement to sell its equity interest in hedge fund BlueMountain Capital Management, New York, the company announced Wednesday.
Assured Guaranty, a financial guaranty insurance company based in Hamilton, Bermuda, will acquire BlueMountain for about $160 million, the firm said in a separate news release Wednesday.
Under the terms of the deal, AMG — BlueMountain's majority shareholder — will receive $91 million in cash at closing, which is expected to occur by the end of the year. Additionally, Assured Guaranty will contribute cash to BlueMountain to fund its working capital needs and the repositioning of the firm, AMG said in its release.
"We are pleased to have had a good partnership with BlueMountain over many years, and also that we worked closely with our long-term partners at BlueMountain to achieve an outcome that is in the best interests of BlueMountain's clients and employees and AMG's shareholders," said Jay C. Horgen, president and CEO of AMG, in the news release.
BlueMountain, which has $19.3 billion in assets under management, is the 16th largest global manager of collateralized loan obligations by AUM, Assured Guaranty said in its news release, citing CreditFlux CLO manager rankings as of first quarter.
As part of the agreement, Andrew Feldstein — BlueMountain's co-founder, CEO and chief investment officer — will join Assured Guaranty as chief investment officer and head of asset management, and retain his current roles at BlueMountain, according to Assured Guaranty.
AMG first acquired an equity interest in BlueMountain in 2007.
News of the sale comes soon after the hedge fund liquidated a $1 billion computer-driven portfolio, shifting its focus back to investing in credit markets, Bloomberg reported in May.
On Wednesday, Assured Guaranty President and CEO Dominic J. Frederico said in a statement in the news release that the firm has 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."
"BlueMountain will be our largest and most important investment outside the financial guaranty sector," Mr. Frederico continued. "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."