Chinese Conglomerate CEFC To Acquire 19.9% Of Cowen Group

Mar 29 2017 | 7:02pm ET

Financial services company Cowen Group, parent of global alternative investment manager Ramius LLC, has entered into an agreement with China Energy Company Limited (CEFC) that will see the Shanghai-based conglomerate acquire 19.9% of Cowen for approximately $100 million.

The transaction also includes up to $175 million in debt financing, Cowen said in a statement announcing the agreement. The terms represented a 29.5% premium to the closing price of Cowen’s common stock on Tuesday, and resulted in a 19% surge on Wednesday. 

The deal, which is subject to customary closing conditions and regulatory and government approvals, is expected to close by the third quarter of this year. It also provides CEFC the right to appoint three directors on New York-based Cowen’s board, which will rise to eleven members. 

CEFC China is the largest private company in Shanghai, the seventh largest private company in China and the 229th largest company on the Fortune Global 500 List, the statement added. 

“We are pleased to welcome CEFC China as a long-term investor and strategic partner,” said Peter Cohen, chairman and CEO of Cowen. “CEFC China, under the leadership of Chairman Ye Jianming, is a highly-respected global organization with a broad portfolio of successful businesses and an impressive investment track record. Our two companies have complementary functional expertise, industry focus, geographic coverage and business networks, which creates a unique business development opportunity.”

“This partnership will accelerate growth in Cowen’s core areas of expertise: investment banking, equities, research and investment management,” he added.

For Cowen Group, Starr Strategic Partners served as financial advisor and Willkie Farr & Gallagher LLP served as legal counsel, the company said. CEFC was represented by Lazard as financial advisor, Skadden Arps as United States legal counsel and King & Wood Mallesons as PRC legal counsel.

The announcement comes just one day after Elon Musk’s Tesla announced the sale of a 5% stake to China’s Tencent Holdings for $1.78 billion. The deals are the latest in a string of increasingly large purchases of global assets by Chinese companies, potentially as a hedge against depreciation of China’s currency. Indeed, after rising 30% in 2015, Chinese companies invested a total of $45.6 billion into the U.S. last year via at least 65 deals, more than triple 2015’s take of $15.6 billion, according to MergerMarket and Rhodium Group data. 

Founded in 1918, Cowen Group is a diversified financial services firm providing alternative asset management, investment banking, research, sales and trading and prime brokerage services through its two business segments: Ramius and its affiliates make up the company’s alternative investment segment, while Cowen and Company and its affiliates make up the broker-dealer segment. Ramius, with $10.7 billion in AUM as of December 1, 2016, specializes in long/short equity, healthcare royalty, event-driven, global macro, activist, real estate, and managed futures strategies. 

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