Tetragon Financial Group has entered into a definitive agreement with Calyon to acquire Lyon Capital Management and certain collateralised loan obligation securities.
LCM was established by Calyon, the corporate and investment bank of Credit Agricole Group, as an asset manager in 2001 and currently has approximately USD2.5bn of loan assets under management.
It is intended that the existing LCM management team will continue in their current roles.
Paddy Dear, a director of Tetragon and a principal of Polygon Credit Management, the investment manager of Tetragon, says: “We are very excited about the opportunity to bring LCM, a profitable operating business, into TFG’s asset pool. We think that the introduction of such a business has the potential to provide TFG with a high quality and repeatable income stream that would supplement TFG’s current income, which is generated primarily from the ownership of a portfolio of CLOs, and will further position TFG to benefit from consolidation in the loan management space.”
“LCM currently serves as manager for two of the CLO deals held by TFG and we have been very pleased with their performance,” says Reade Griffith, also a director of TFG and a principal of the investment manager. “We think of them as an asset manager focused on credit fundamentals and they have consistently been among TFG’s best performing asset managers. We also think there is good value in the CLO securities TFG is purchasing and that aspect of the transaction fits nicely into TFG’s core business.”
The consummation of the transaction is subject to closing conditions customary to similar transactions. The transaction is expected to close early in the first quarter of 2010.
In connection with the transaction, LCM will enter into a joint venture with an affiliate of the investment ,anager, Polygon Management, pursuant to which Polygon will purchase a 25 per cent equity interest in LCM. Certain Polygon affiliates will also enter into an agreement with LCM to provide operating, infrastructure and administrative services to LCM, including services that have historically been provided to LCM by Calyon.
Tetragon is a Guernsey closed-ended investment company traded on Euronext Amsterdam. It invests primarily through long-term funding vehicles such as collateralised loan obligations in selected securitised asset classes and aims to provide stable returns to investors across various interest rate and credit cycles.
