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GLG Partners, Europe's third largest hedge fund manager with more than 40 funds and USD20bn in assets under management, has announced plans to access the US public markets through a reverse acquisition transaction with Freedom Acquisition Holdings that values GLG at around USD3.4bn.
Freedom is a 'blank check' company incorporated in Delaware last year to effect a merger, stock exchange, asset acquisition, reorganisation or similar business combination with an operating business or businesses offering significant growth potential, and conducted its initial public offering on December 28.
Under the transaction, which is expected to close in the fourth quarter, the owners of GLG will receive from Freedom USD1bn in cash and 230 million shares of Freedom common stock on a fully diluted basis. The combined company, which will be named GLG Partners, Inc, will also explore the possibility of a dual listing in Europe
Based on the closing price of Freedom's shares on June 22, Freedom's shareholders will own approximately 28 percent and current GLG equity holders will own approximately 72 percent of the combined company's shares. GLG's equity holders have committed to reinvest approximately 50 per cent of their after-tax cash proceeds into the firm's funds at full fees.
'This strategic transaction is an important step in building GLG's global business, affording us the opportunity to increase brand awareness and expand in major targeted markets, including the US, Middle East and Asia,' says Noam Gottesman, the firm's founder and co-chief executive.
'Accessing the public markets through Freedom allows GLG to take full advantage of our highly scalable infrastructure as well as our recent growth and track record of success to expand our client relationships and distribution capabilities. In addition it will provide us with a publicly traded equity currency with which to compete for, retain and incentivise the most talented and sought-after professionals in our industry and pursue our growth strategies.'
'GLG's highly scalable asset management platform represents an excellent investment opportunity for our shareholders,' says Freedom president and chief executive Nicolas Berggruen. 'We look forward to working with the management team of GLG as they continue to grow the company's business and expand into the US and other dynamic global markets.
Upon consummation of the acquisition, Gottesman will become chairman and co-chief executive of the combined company, while Emmanuel Roman, currently co-chief executive of GLG, will hold the same position, and they as well as Pierre Lagrange will remain managing directors of GLG.
'The combined company will build on Freedom's existing shareholder base and leverage the experience of its founders,' Roman says. 'With their support, and expanded access to the capital markets, we look forward to building our global brand, extending our strong investment track record, expanding our investment products and strategies, and leveraging on our success in Europe and the UK to penetrate other major markets.'
To finance the transaction, Freedom will use the proceeds from its IPO and borrow the balance of up to USD570m to pay the cash portion of the purchase price. Freedom and its subsidiaries will issue 230 million shares of common stock on a fully diluted basis valued at USD2.4bn to the GLG equity holders.
Perella Weinberg Partners is financial advisor and Chadbourne & Parke is legal counsel to GLG, while Citi is financial advisor and Greenberg Traurig PA is legal counsel to Freedom.
Meanwhile Istithmar, an investment vehicle of the government of Dubai, and leading German private bank Sal. Oppenheim have both agreed to acquire 3 per cent shareholdings in GLG from a former principal of the hedge fund manager and to invest into various GLG-managed funds in transactions expected to close in next month. Istithmar is headquartered in Dubai, with offices in Shanghai and New York, while Cologne-based Sal. Oppenheim has some EUR138bn in assets under management.
Says Gottesman: 'We welcome these two experienced and highly respected world-class investors. In addition to their ownership interests, Istithmar and Sal. Oppenheim will help to support the further development and expansion of our business in the Middle East and Europe.'
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