Assured Guaranty and Sound Point Capital Management have entered into an agreement to combine their businesses in a move aimed at improving their competitive edge in the market. The deal will see Sound Point Capital Management acquire AssuredIM, which manages over $10 billion in assets for institutional clients.
The transaction is expected to close in the second half of the year, subject to regulatory approvals and other customary closing conditions. The financial terms of the deal were not disclosed.
Assured Guaranty will retain a 70% stake in AssuredIM, with the remaining 30% to be held by Sound Point Capital Management. In exchange for this equity interest, Assured Guaranty will acquire a 30% stake in Sound Point Capital Management.
The acquisition of AssuredIM will enable Sound Point Capital Management to expand its credit investment capabilities and offer a wider range of investment products to its clients. The transaction will also provide Assured Guaranty with access to Sound Point Capital Management's credit investment expertise and resources.
Assured Guaranty is a leading provider of credit products and financial guarantees to the public finance, infrastructure, and structured finance markets. The company's subsidiaries include Assured Guaranty Municipal Corp., Assured Guaranty Corp., and Assured Guaranty Re Ltd.
Sound Point Capital Management is a New York-based credit-oriented investment manager that oversees approximately $32 billion in total assets. The firm was founded in 2008 by Stephen Ketchum, who previously served as Co-Head of Credit at Millennium Partners.
The acquisition of AssuredIM is expected to be accretive to Sound Point Capital Management's earnings and will further strengthen its position as a leading credit investment manager. The company has a strong track record of delivering attractive risk-adjusted returns to its investors.
The combined business will have a broader product range, enhanced investment capabilities, and a larger asset base, which should result in improved operational efficiencies and cost savings. The transaction is also expected to create significant opportunities for cross-selling and new business development.
Mayer Brown advised Assured Guaranty on the transaction, while Sound Point Capital Management was advised by Schulte Roth & Zabel LLP.
Assured Guaranty's stock (NYSE: AGO) is up 4% in premarket trades following the announcement of the acquisition. The company's shares have gained 28% over the past year and have outperformed the S&P 500 Index.
In conclusion, the acquisition of AssuredIM by Sound Point Capital Management is a significant development in the asset management industry. The deal will create a stronger and more diversified investment platform that is well-positioned to capitalize on the growing demand for credit investment products.