Assured Guaranty’s Asset Management Business to Combine with Sound Point Capital Management
Posted on 04/09/2023
On April 5, 2023, Assured Guaranty Ltd. disclosed it is acquiring a 30% stake in US$ 32 billion hedge fund Sound Point Capital Management LP. This is in exchange for Assured’s equity interest in its approximately US$ 15.2 billion money management unit Assured Investment Management LLC. Assured Guaranty is a financial guaranty insurer. The deal is expected to make Sound Point the world’s fifth largest collateralized loan obligation manager by assets under management, claims the news release.
As part of the transaction expected to close in the third quarter 2023, Assured’s subsidiaries, U.S. insurance companies Assured Guaranty Municipal Corporation and Assured Guaranty Corporation, will hire Sound Point as its sole alternative credit manager and invest US$ 1 billion over time in alternative credit strategies, including nearly US$ 400 million currently managed by Assured Investment Management as of December 31, 2022. When the deal closes Assured Investment Management will transfer its approximately US$ 15.2 billion in assets under management, including approximately US$ 14.5 billion of collateralized loan obligations as of December 31, 2022 to Sound Point.
When the transaction is completed, Dominic Frederico, Assured Guaranty’s president and CEO, will join Sound Point’s board of managers. Assured Guaranty earlier on wanted to establish a fee-based earnings stream independent of the risk-based premiums generated by its financial guaranty business. The insurer moved to convert virtually all of AssuredIM’s assets under management into fee-earning AUM.
Assured Healthcare Partners LLC will remain an independent healthcare investment management firm and is not part of the Sound Point transaction. Carried interest associated with Assured Healthcare Partners funds and another single-asset fund in which Assured Guaranty is invested will be retained by Assured Guaranty, as well.
Advisors
Goldman Sachs & Co. LLC and Insurance Advisory Partners LLC served as financial advisors, and Mayer Brown LLP and Milbank LLP acted as legal advisors, to Assured Guaranty. Bank of America acted as financial advisor, and Pryor Cashman LLP and DLA Piper acted as legal advisors, to Sound Point.
Assured Guaranty acquired AssuredIM (formerly BlueMountain Capital Management, LLC) in October 2019.