AllianceBernstein Buys CarVal Investors for $750 Million
Posted on 03/17/2022
Equitable Holdings, Inc. (NYSE: EQH) announced that one of its subsidiaries, AllianceBernstein (NYSE: AB), has entered into an agreement to acquire CarVal Investors L.P.
CarVal is a global private alternatives investment manager with US$ 14.3 billion in AUM, primarily focused on opportunistic and distressed credit, renewable energy infrastructure, specialty finance and transportation investments. CarVal Investors was founded in 1987 by commodity giant Cargill Inc. In 2006, CarVal Investors became an independent subsidiary of Cargill, allowing the firm to expand more broadly as a fund manager. In 2019, CarVal Investors became an employee-owned firm after Cargill sold its stake to CarVal employees. Lucas Detor, James Ganley, and Jody Gunderson, managing principals of CarVal took over. Cargill wanted to divest the unit because it wasn’t actively managing the business. Earlier, Cargill spun off its Hopkins-based Black River Asset Management unit as three separate companies.
AllianceBernstein
The acquisition of CarVal further enhances Equitable Holding’s differentiated business model, which pairs retirement, asset management and affiliated advice. This transaction expands AB’s higher-multiple private markets platform to nearly $50 billion in AUM and elevates AB into a leading private credit provider with direct origination capabilities. Additionally, Equitable Holdings expects to generate synergies following the acquisition. Equitable will allocate US$ 750 million of General Account assets into CarVal strategies to improve risk adjusted returns to policyholders and CarVal will have access to AB’s global distribution platform.
AB has announced a definitive agreement to purchase 100% of CarVal for an upfront purchase price of US$ 750 million and a multi-year earnout if certain targets are reached.
The deal will be funded primarily through the issuance of AB units.
This efficient deal structure has no impact to EQH capital position or cash flows as higher fee revenue from CarVal offsets the change in EQH’s ownership in AB from 65% to circa 62%, with the potential to reach circa 60% if the full earnout is paid upon certain targets being reached.
At the transaction closing, expected to occur in the second quarter of 2022, CarVal will become a wholly owned subsidiary of AllianceBernstein L.P. and will be rebranded as AB CarVal Investors. The transaction is subject to customary regulatory and closing conditions. CarVal and its employees will continue to operate from its Minneapolis, Minnesota headquarters and its office locations around the world.
Equitable Holdings is a financial services holding company comprised of two complementary and well-established principal franchises, Equitable and AllianceBernstein. Founded in 1859, Equitable provides advice, protection and retirement strategies to individuals, families and small businesses.