Assured Guaranty, a financial guaranty insurer, is acquiring a 30% stake in $32 billion hedge fund Sound Point Capital Management in exchange for Assured's equity interest in its approximately $15.2 billion money management arm Assured Investment Management, according to a Wednesday news release.
The deal is expected to make Sound Point the world's fifth largest collateralized loan obligation manager by assets under management, the release said.
As part of the transaction expected to close in the third quarter, Assured's subsidiaries, U.S. insurance companies Assured Guaranty Municipal and Assured Guaranty, will hire Sound Point as its sole alternative credit manager and invest $1 billion over time in alternative credit strategies, including nearly $400 million currently managed by Assured Investment Management as of Dec. 31. When the deal closes Assured Investment Management will transfer its roughly $15.2 billion in assets under management, including approximately $14.5 billion of collateralized loan obligations as of Dec. 31, to Sound Point.
When the transaction is completed, Dominic Frederico, Assured Guaranty's president and CEO, will join Sound Point's board of managers.
Assured Healthcare Partners, a healthcare investment management firm, is not part of the Sound Point transaction.