Assured Guaranty Ltd. stock is up 4% in premarket trade Wednesday after the credit product provider to the financial sector said it’s creating the world’s fifth largest asset management business that handles collateralized loan obligations in a transaction with Sound Point Capital Management.
Assured Guaranty
AGO,
+1.51%
said the deal that will immediately add to its earnings per share and return on equity and will result in 30% ownership of the combined entity in exchange for 100% of its equity in Assured Investment Management LLC (AssuredIM).
Sound Point Capital Management will acquire AssuredIM, which has $15.2 billion in assets under management as of Dec. 31.
Sound Point will combine its $32 billion in total assets with AssuredIM’s to manage a projected $47 billion in collateralized loan obligations and structured asset-backed investments.
New York-based Sound Point Capital Management will be Assured Guaranty’s sole alternative credit manager to invest $1 billion over time in alternative credit strategies, including nearly $400 million currently managed by AssuredIM as of Dec. 31, the company said.
Sound Point will manage 32 active collateralized loan obligations (CLOs) currently handled by Assured IM, including 25 U.S. CLOs and seven European CLOs, making Sound Point the fifth largest broadly syndicated loan CLO manager globally on a pro forma basis.
Sound Point’s current portfolio includes 39 CLOs of its own and it also manages more than $10 billion of assets in direct loans, capital solutions, distressed, structured products, commercial real estate lending, and specialty finance.
Assured Guaranty, a specialist in financial guaranty insurance, acquired BlueMountain Capital Management LLC in 2019 and renamed the business AssuredIM.
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