BOSTON–(BUSINESS WIRE)–BrightSphere Investment Group Inc. (NYSE: BSIG) announced today that it has entered into a definitive agreement to sell its 60% interest in Landmark Partners LLC (“Landmark”) to Ares Management Corporation (NYSE: ARES) for $690 has completed $ million. As part of the transaction, Ares will also acquire the 40% interest in Landmark held by Landmark’s management team for $390 million for a total transaction value of approximately $1.1 billion for 100% of Landmark Partners LLC .
In addition to acquiring BrightSphere’s interest in Landmark, Ares has also agreed to acquire BrightSphere’s co-investments in Landmark funds, which had a book value of approximately $34 million as of December 31, 2020. BrightSphere expects total after-tax proceeds from the transaction of approximately $630 million, including proceeds from the sale of co-investments.
The transaction is subject to customary regulatory approvals and closing conditions and is expected to close in the second quarter of 2021.
Suren Rana, BrightSphere’s President and Chief Executive Officer, said, “Landmark is joining forces with one of the leaders in the alternative business, for which Landmark offers highly strategic, complementary and synergistic capabilities. I would like to thank the remarkably talented team at Landmark for their important contributions to BrightSphere. We sincerely wish them the best in all their future initiatives.”
“The valuation achieved in this transaction unlocks significant value for BrightSphere shareholders and we believe it further underscores the high intrinsic value anchored in our companies relative to the current trading levels of our shares. Our remaining business continues to be strong with world-class quantitative strategies offered by Acadian, as well as fundamental strategies from TSW and private alternative strategies from Campbell Global,” added Mr. Rana.
Founded in 1989 and acquired by BrightSphere in August 2016, Landmark specializes in aftermarket transactions in the private equity, real estate and infrastructure funds and investments sectors. As of and for the fiscal year ended December 31, 2020, Landmark had $18.4 billion in assets under management, with GAAP management fee income of $146.8 million and contributed GAAP net income to BrightSphere that attributable to majority shareholders and Adjusted EBITDA of $12.3 million and $42.2 million. respectively.1
Morgan Stanley & Co LLC acted as financial advisor to BrightSphere. Goldman Sachs & Co. LLC acted as financial advisor to Landmark. Ropes & Gray acted as legal counsel to BrightSphere and Landmark. RBC Capital Markets, LLC and Credit Suisse Securities (USA) LLC acted as financial advisors to Ares and Kirkland & Elis LLP acted as legal advisors.
About BrightSphere
BrightSphere is a diversified, global wealth management company with approximately $157 billion in assets under management as of December 31, 2020. private and public market alternatives and liquid alpha strategies designed to meet a range of risk and return objectives. For more information, visit BrightSphere’s website at www.bsig.com. Information that may be important to investors is routinely posted on our website.
Forward-Looking Statements
This press release contains forward-looking statements, including those related to the completion of our disposal of Landmark, the expected total and after-tax proceeds from the disposal, the expected closing date of the transaction, and the strength and intrinsic value of our business. The words or phrases “expect,” “anticipate,” “estimate,” and other similar expressions are intended to identify such forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. Such statements are subject to various known and unknown risks and uncertainties, and readers should be cautioned that forward-looking information provided by or on behalf of the company is not a guarantee of future performance.
Actual results could differ materially from those contained in the forward-looking information as a result of various factors, some of which are beyond the Company’s control, including without limitation those discussed in the Company’s most recent Annual Report on Form 10-K. March 2021 and subsequent SEC filings with the Securities and Exchange Commission and those related to the anticipated closing of the transaction and the satisfaction of required closing conditions. Because of such risks and uncertainties and other factors, the Company cautions any person receiving such forward-looking information not to place undue reliance on such statements. In addition, such forward-looking statements speak only as of the date of this press release and the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release or the occurrence of unanticipated events.
Non-GAAP Financial Measures
This press release contains references to Adjusted EBITDA, which is a non-GAAP financial measure. A reconciliation of Adjusted EBITDA to GAAP net income attributable to controlling interests is included below. The company cautions that its calculation of Adjusted EBITDA may not be consistent with Adjusted EBITDA calculated by other companies.
Landmark GAAP net income attributable to controlling interests reconciled to Adjusted EBITDA
| For the year ended December 31, 2020 | |||
| US GAAP net income attributable to controlling interests |
$ |
12.3 |
|
| Effect of a one-time compensation arrangement that includes advances on future compensation payments |
|
17.0 |
|
| Non-cash revaluations of employee equity and profit shares |
|
(6.0 |
) |
| Amortization of acquired intangible assets and pre-acquisition employee capital |
|
12.5 |
|
| interest income |
|
(0.1 |
) |
| interest expense |
|
0.1 |
|
| depreciation and amortization |
|
0.8 |
|
| income tax expense |
|
5.6 |
|
| Adjusted EBITDA |
$ |
42.2 |
|
1 For more information, see “Non-GAAP Measures” and “Reconciliation of Landmark GAAP Net Income Attributable to Controlling Interests to Adjusted EBITDA” at the end of this press release.
