$11.5 Billion Alternative Asset Manager To Go Public

Mar 13 2008 | 3:13pm ET

Halcyon Asset Management announced today that it is taking the hedge fund firm public with the aim of keeping top talent. The New York-headquartered firm is accessing the public equity markets through an acquisition by its affiliate, Alternative Asset Management Acquisition Corp.

The transaction values Halcyon at approximately $974 million.

Under the terms of the agreement, members of Halcyon entities will receive up to $505 million in cash and notes, and will retain LLC interests in Halcyon exchangeable into shares of AAMAC on a one-for-one basis.

The terms also provide for the ownership of the Halcyon exchangeable interests to be adjusted upward contingent upon achieving certain stock price targets. Halcyon members will initially own approximately 43.6% of the fully diluted ownership interest of the new entity.

Partners of Halcyon entities will further align their interests with fund investors, reinvesting 75% of the after-tax cash proceeds in Halcyon funds, typically for three years, at full fees to the public stockholders. Halcyon's partners will enter into lock-up and non-compete agreements, and their equity consideration will generally vest over five years.

Halcyon manages multi-strategy funds, as well as additional strategies focused on off-the-run and difficult-to-source investments, stressed/distressed and undervalued asset-backed securities, senior secured bank loans and long/short corporate debt investments.

The firm has a diverse investor base including leading public and private pension funds, endowments, foundations, financial institutions, insurance companies, funds of hedge funds and high net worth individuals. It was founded in 1981, has approximately $11.5 billion in assets under management.

"We believe this transaction, first and foremost, will benefit our investors. It will enhance our ability to attract and retain the best talent in the business, ensuring our continued ability to build on our track record by having the right people for the right strategies at the right time," said John Bader, co-chairman of Halcyon Asset Management. "It will give us a currency for further growth, which will help us motivate employees and support our recruiting efforts."

"This transaction accomplishes AAMAC's stated IPO objective: to find an alternative asset management firm that has a long track record of success," said Michael Levitt, current chairman of AAMAC. "Halcyon has proven through its growth that it has the history, scale, investment and risk management processes, operational infrastructure and capacity to attract large institutional investors.”


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