Tuesday, 9 February 2016
Last updated 18 hours ago
Oct 29 2012 | 1:47pm ET
A Polygon Investment Partners subsidiary has acquired its parent company for almost US$100 million.
Tetragon Financial Group, which runs a listed credit hedge fund, acquired Polygon for 11.7 million non-voting shares, valued at about US$99 million. Channel Islands-based Tetragon, which focuses on structured loans, said that buying its parent company would consolidate the two firms' experience and infrastructure, and give the combined entity as much capital as possible.
"By putting it together, we think it really provides the three pieces of the puzzle," Polygon co-founder Paddy Dear, who is also a principal of Tetragon, told Bloomberg News.
"This is a continuation of TFG's strategy to expand its asset management platform and diversify and strengthen its income streams."
The reverse-merger will see Polygon, previously privately held, publicly listed. Tetragon will also buy the firm's stakes in LCM Asset Management and Green Oak Real Estate.
At the same time as announcing its acquisition of Polygon, Tetragon said it would buy back some US$150 million worth of the very same non-voting shares it exchanged for Polygon.
The deal is unlikely to please those who have previously accused Polygon and Tetragon of having an "incestuous" relationship. An investor last year sued both funds, accusing Tetragon of writing down its net asset value four years ago to collect bigger fees when credit markets improved. Tetragon and Polygon co-founder Alexander Jackson has also sued after he was removed from Tetragon's board of directors last year, reportedly because he opposed the investment in Green Oak.
The investor lawsuit was dismissed in February.
Polygon has about US$450 million in assets under management, and earlier this year launched a mining hedge fund. The firm completed the long, draw out liquidation of its flagship Global Opportunities Fund, which once managed US$7.5 billion, last year. The fund lost almost half of its value in 2008; Dear suggested that the Polygon-Tetragon consolidation would keep the firm better-insulated against future market disasters.