Structured credit manager Waterfall EIT U.K. proposed to acquire private credit firm Alternative Credit Investments in a £639 million ($827 million) cash offer, according to a regulatory filing Tuesday.
Under the proposal, shareholders in ACI will transfer shares to Bidco, a new subsidiary created to manage Waterfall's funds, for which they will receive cash. ACI's shareholders will also be entitled to an interim dividend of up to 12 pence per ACI share if declared for the period ended Sept. 30.
Waterfall and Bidco have received ACI shareholders' support representing about 40.8% of total ACI shares as of Monday. The acquisition is expected to close during the first quarter of 2021. Shareholders that approved the takeover include Invesco Asset Management, Pentwater Capital Management, Berry Street Capital Management, GLG Partners and Premier Fund Managers, according to the filing.
Waterfall was also appointed subadviser to ACI, effective Oct. 1.
"The board welcomes and unanimously recommends the offer from Waterfall, which we believe is the best outcome for shareholders, providing liquidity and certainty. The offer already has the support of holders of 40.8% of the company's shares and we urge undecided shareholders to consider the advantages of this firm cash offer against the alternatives in highly uncertain markets," Simon King, chairman of ACI, said in the filing.
Patrick Lo, partner at Waterfall, said in the filing: "We are very pleased to announce this acquisition with the unanimous recommendation of the board of ACI. As an experienced asset manager in the structured credit market, we believe that the acquisition represents an attractive opportunity to secure a portfolio of assets that fits with our existing investment strategy, while seeking to provide ACI shareholders with certain and timely liquidity at an attractive price."
Waterfall Asset Management, parent company of Waterfall EIT U.K., has $8.3 billion in assets under management.
ACI was advised by Smith Square Partners.