The Hedge Fund Law Report

The definitive source of actionable intelligence on hedge fund law and regulation

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By Topic: Initial Public Offerings

  • From Vol. 8 No.45 (Nov. 19, 2015)

    IPO of Global Asset Manager Amundi Raises Liquidity for Société Générale

    Amundi, one of the world’s top asset managers, which was owned by Société Générale (SG) and the Crédit Agricole group, recently completed an initial public offering (IPO) of SG’s 20% stake in the company.  This article provides a summary of the offering; an overview of Amundi’s business, as detailed in the IPO registration statement; and a look at the risks and regulatory requirements detailed in the registration statement.  The Amundi IPO is aimed primarily at facilitating SG’s sale of its stake in the company.  Fund managers have also used IPOs to establish permanent capital or private equity vehicles.  See “Ares Management IPO Raises Permanent Capital and Creates Liquidity for Founders’ Interests,” The Hedge Fund Law Report, Vol. 7, No. 14 (Apr. 11, 2014); “Anatomy of a Blank Check IPO by a Hedge Fund Manager,” The Hedge Fund Law Report, Vol. 7, No. 13 (Apr. 4, 2014); and “Prospectus for Suspended Ellington Financial IPO Details Mechanics of a Hedge Fund Permanent Capital Vehicle,” The Hedge Fund Law Report, Vol. 2, No. 50 (Dec. 17, 2009).  They can also be used for succession planning by private fund managers.  See “Mechanics of a Hedge Fund Manager IPO,” The Hedge Fund Law Report, Vol. 5, No. 16 (Apr. 19, 2012).

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  • From Vol. 7 No.39 (Oct. 17, 2014)

    Ackman’s Pershing Square Public Offering Features Novel Performance Fee Mechanism

    Following in the footsteps of other private fund managers who have sought permanent capital through public offerings, activist investor Bill Ackman’s Pershing Square Holdings, Ltd. has raised about $2.7 billion through a recent offering of its shares on Euronext Amsterdam.  Prior to the offering, the company converted into a closed-end investment vehicle; its shareholders will be able to achieve liquidity by selling their shares on that exchange.  This article focuses on the novel approach to the company’s calculation of performance fees and on the tax treatment of the entity and its investors in Guernsey, where it is organized, and the Netherlands, where its shares now trade.  For discussions of other fund managers who have gone to the public markets for permanent capital, see “Anatomy of a Blank Check IPO by a Hedge Fund Manager,” The Hedge Fund Law Report, Vol. 7, No. 13 (Apr. 4, 2014); and “Prospectus for Suspended Ellington Financial IPO Details Mechanics of a Hedge Fund Permanent Capital Vehicle,” The Hedge Fund Law Report, Vol. 2, No. 50 (Dec. 17, 2009).  Other managers have used public offerings to monetize the value of their businesses, to provide capital for expansion and to create liquidity for founders and employees.  See “Ares Management IPO Raises Permanent Capital and Creates Liquidity for Founders’ Interests,” The Hedge Fund Law Report, Vol. 7, No. 14 (Apr. 11, 2014); and “Mechanics of a Hedge Fund Manager IPO,” The Hedge Fund Law Report, Vol. 5, No. 16 (Apr. 19, 2012).

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  • From Vol. 7 No.14 (Apr. 11, 2014)

    Ares Management IPO Raises Permanent Capital and Creates Liquidity for Founders’ Interests

    Alternative investment manager Ares Management is in the process of creating and offering a publicly-traded limited partnership to hold its asset management business.  Its recently filed registration statement on form S-1 indicates that the offering will be for $100 million of limited partnership interests in Ares Management, L.P.  Ares is following in the footsteps of other alternative asset managers, such as Oaktree Capital, which have sought to monetize the value of their management businesses to provide capital for expansion, to assist founders and employees in cashing out and to facilitate succession.  See “Mechanics of a Hedge Fund Manager IPO,” The Hedge Fund Law Report, Vol. 5, No. 16 (Apr. 19, 2012).  See also “Succession Planning Series: Selling a Hedge Fund Founder’s Interest to an Outside Investor (Part Two of Two),” The Hedge Fund Law Report, Vol. 7, No. 2 (Jan. 16, 2014).  Other fund managers have gone to the public markets as an alternate source of capital for private equity-type investments (see “Anatomy of a Blank Check IPO by a Hedge Fund Manager,” The Hedge Fund Law Report, Vol. 7, No. 13 (Apr. 4, 2014)) and to fund “permanent capital” vehicles for specific purposes, such as the acquisition of mortgage-backed securities (see “Prospectus for Suspended Ellington Financial IPO Details Mechanics of a Hedge Fund Permanent Capital Vehicle,” The Hedge Fund Law Report, Vol. 2, No. 50 (Dec. 17, 2009)).

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  • From Vol. 7 No.13 (Apr. 4, 2014)

    Anatomy of a Blank Check IPO by a Hedge Fund Manager

    Marc Lasry and Sonia E. Gardner, founders of private fund manager Avenue Capital Management (Avenue), are seeking to raise $175 million of new capital through a “blank check” initial public offering.  They have formed a new entity, Boulevard Acquisition Sponsor, LLC (Sponsor), to serve as sponsor of the offering.  The shares will be offered by Boulevard Acquisition Corp. (BAC), a corporation whose initial shareholders are Sponsor and three proposed independent directors of BAC.  Avenue portfolio manager Stephen S. Trevor is BAC’s President and CEO.  BAC’s recently-filed amended Registration Statement on Form S-1 provides a helpful example of the workings of a blank check offering by an established manager.  As is the case with all public offerings, SEC rules require the registration statement for a blank check IPO to contain a great deal of information about the offering and its sponsors.  This article focuses on the logistics and unique characteristics of a blank check IPO, the economic terms of the offering and risks facing potential investors.  Hedge fund managers have used or attempted to use public offerings for a number of business purposes, including to monetize the value of a hedge fund management business (see “Mechanics of a Hedge Fund Manager IPO,” The Hedge Fund Law Report, Vol. 5, No. 16 (Apr. 19, 2012)), and to raise funds to acquire mortgage backed securities (see “Prospectus for Suspended Ellington Financial IPO Details Mechanics of a Hedge Fund Permanent Capital Vehicle,” The Hedge Fund Law Report, Vol. 2, No. 50 (Dec. 17, 2009)).

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  • From Vol. 5 No.16 (Apr. 19, 2012)

    Mechanics of a Hedge Fund Manager IPO

    On April 12, 2012, Oaktree Capital Group (Oaktree), one of the world’s largest managers of credit-focused hedge funds and private equity funds, conducted a public offering of Class A units (Public Offering).  The Rule 424(b) prospectus, filed April 12, 2012 (Prospectus), indicated that all of the proceeds from the Public Offering will be directed towards acquiring interests in Oaktree’s business from its principals, employees and investors, including Oaktree’s senior management.  In other words, the Public Offering represents an opportunity for such persons to monetize their firm holdings.  Principals and employees may wish to monetize their holdings for various reasons.  For instance, some principals and employees may wish to diversify their financial holdings.  Others may view monetization of their interests as a step in the succession planning process whereby economic ownership of the firm can be transferred to others.  See “Key Considerations for Hedge Fund Managers in Developing a Succession Plan (Part Two of Two),” The Hedge Fund Law Report, Vol. 5, No. 8 (Feb. 23, 2012).  The Public Offering may portend a trend in public offerings by investment management firms, including a highly-anticipated public offering of approximately 10% of the interests in Carlyle Group LP that is expected to be consummated in the near future.  This article discusses the details of the Oaktree Public Offering and highlights some of the benefits and costs to a hedge fund manager going public in comparison to other monetization alternatives, such as pursuing a merger or acquisition of the firm.  See “Buying a Majority Interest in a Hedge Fund Manager: An Acquirer’s Primer on Key Structuring and Negotiating Issues,” The Hedge Fund Law Report, Vol. 4, No. 17 (May 20, 2011).

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  • From Vol. 2 No.50 (Dec. 17, 2009)

    Prospectus for Suspended Ellington Financial IPO Details Mechanics of a Hedge Fund Permanent Capital Vehicle

    Only days after Ellington Financial LLC (Ellington), run by Michael Vranos’ hedge-fund firm, Ellington Management Group, LLC (Manager), filed a prospectus with the SEC announcing a planned initial public offering (IPO) to raise cash in order to purchase mortgage-backed bonds, Ellington suspended the IPO due to “market conditions.”  The IPO was premised on the idea that investors would be willing to purchase Ellington shares at a premium, an average of $26 per share, 6.1 percent more than the value of its net assets, or 1.06 times Ellington’s shareholder equity, so that Ellington could invest in potentially underrated home loans in the recovering United States housing market.  While the IPO has ceased, its mechanics and the risk factors discussed in the Ellington prospectus remain particularly interesting for hedge fund managers contemplating a similar issuance of shares to obtain so-called “permanent capital” for the purpose of investing in designated assets.  This article summarizes the material terms and provisions of the Ellington prospectus and the suspended IPO.

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