Conning, the global insurance asset management firm, is to buy a majority stake in US debt manager Octagon Credit Investors.
Conning will pay $175.6 million for an 82 percent stake in the business, PDI understands. Management will retain the remaining share.
Octagon, which has been investing in sub-investment grade markets for 20 years, manages $12.8 billion in assets through CLOs, separate accounts and commingled fund offerings.
A spokeswoman for Conning said: “The acquisition provides clients and prospects with access to key asset class expertise [such as bank loans, CLOs and high yield bonds]. CLOs are a key asset class for insurance companies and there is increased demand from clients and prospects for asset classes that provide incremental yield and protect against rising rates.
“[The] floating-rate component of bank loans is attractive during a rising rate environment and CLOs structures have been resilient through market cycles. The deal strengthens Conning’s ability to provide clients with global investment solutions and access to asset classes experts that are critical to delivering results and protecting clients during challenging markets.”
Andy Gordon will continue as Octagon’s chief executive. The firm’s existing investment and business teams will remain in place.
Woody Bradford, chairman and CEO of Conning, said: “We look forward to partnering with Andy and the experienced Octagon team in pursuing new opportunities globally. This transaction is a natural extension of Conning’s capabilities and provides our clients with access to specialised floating and fixed-income asset classes that have performed well through various market cycles. Conning and Octagon share a similar culture and investment philosophy that will benefit both firms and our clients.”
Gordon said: “We are excited to join a leading, highly-respected asset management firm that shares Octagon’s collaborative culture, commitment to growth, and dedication to serving its clients.
“Partnering with Conning will not only provide Octagon with additional capital to meet regulatory risk retention requirements and strengthen our position as a leading US CLO manager, but will also help us develop and deliver a broader range of investment solutions to our collective global investor base.”
The transaction is expected to close early in 2016, subject to regulatory approvals. Octagon will then operate as a subsidiary of Conning and be governed by its own board of directors.
Broadhaven Capital Partners served as financial advisor and Morgan, Lewis & Bockius served as legal advisor to Conning. Citigroup served as financial advisor and Weil, Gotshal & Manges served as legal advisor to Octagon and other sellers. Simpson Thacher & Bartlett served as legal advisor to Octagon management.
Conning is an investment firm for the global insurance industry with $93 billion in assets under management, as of 30 September 2015.
Founded in 1912, it is headquartered in Hartford, Connecticut and has offices in New York, London, Cologne, Hong Kong and Tokyo.
Octagon is headquartered in New York and has 48 professionals.