Carlye Group Inc., the global investment giant, has agreed to purchase CBAM Partners from American Businessman and investor Todd Boehly for $787.2 million. According to a statement issued by Carlyle, the deal comprises $615 million in cash and 4.2 million common shares issued by the company. Eldridge Industries, cofounded by Boehly, has a majority stake in CBAM Partners.
The deal will make Carlyle Group Inc. one of the largest Managers of Collateralized loan obligations (CLO), managing around $48 billion of CLO assets. Last year Carlyle had issued 14 syndicated CLOs totaling $7.4 billion. CLOs buy out leveraged loans and repackage them into bonds of different risks and rewards.
Acquisition of private credit assets of CBAM
As per Bloomberg News, Carlyle Group is in the process of acquiring other private credit assets of CBAM. Bloomberg had earlier reported about the exclusive merger talks between CBAM and Carlyle.
This acquisition reflects the push towards turbocharging growth by Carlyle CEO Kewsong Lee, who became the head of the company in 2020 after Co-CEO Glenn Youngkin’s exit. Lee has pushed its executives to source new deals with recurring fees to make shareholders happy.
Carlyle wants to create a steady revenue stream to counter the volatile market-driven profits and has set this as a top priority. The firm has plans to raise $130 billion between 2021 and 2024.
In a conversation with Wall Street Analysts, Lee said they looked for proximity to big and scalable strategies.
Carlyle’s focus has been on expanding its global credit group, which saw the fastest growth in the last four years. As of December 31, 2021, it had $ 73 billion in assets under its control.
iStar Inc purchase deal
In February, Carlyle had agreed to buy the net lease business of iStar Inc for $3 billion in enterprise value.
Six years ago, CBAM partners were founded by Don Young, Jay Garrett, and Mike Damaso and have issued more than $12 billion of CLOs since inception. CBAM is backed by Security Benefit, part of Eldridge, and provides retirement benefit products, including annuity.
In a statement, Mark Jennings, Carlyle’s global Head of Credit, said that acquiring CBAM will scale Carlyle’s already strong CLO business. It will create more shareholder value with substantial and incremental fee earnings from day one. The deal will help build strong momentum as Carlyle grows on the global credit platform with its strategic planning.
The deal is expected to close by the end of the 2022 first half. BofA Securities is the financial advisor to CBAM Partners, and Weil, Gotshal & Manges LLP will be the legal advisor. Carlyle’s legal advisor will be Latham & Watkins.
