Cairn Capital Group Ltd (Cairn Capital) will acquire and merge with specialist distressed credit manager Bybrook Capital (Bybrook) as part of a new strategic partnership between both companies.
The merger with Bybrook brings together Cairn Capital’s leveraged loan and alternative credit franchise with Bybrook’s distressed and special situations business. The Bybrook partners will maintain full focus on managing its current strategies while remaining significant investors in funds alongside investors. They will become minority shareholders at Cairn Capital.
It also fulfils Cairn Capital’s ambition to create a diversified alternative credit manager with approximately $8 billion in AUM across public, private, performing and distressed investment opportunities. The transaction combines Cairn Capital’s $6 billion in AUM with Bybrook’s $2.5 billion in AUM.
The deal has the support of Mediobanca S.p.A. (Mediobanca), Cairn Capital’s majority shareholder. Through this arrangement, Mediobanca will reaffirm its majority shareholder position with a stake of approximately 64 percent while the remaining 36 percent will be held by former Bybrook shareholders and existing Cairn Capital minority shareholders.
The agreement remains subject to the customary conditions, including approval from the relevant regulatory authorities, and is expected to close in the second quarter of 2021.
Nicholas Chalmers, chief executive officer at Cairn Capital, said: “We are delighted at the prospect of merging with an outstanding firm that has a proven track record of delivering differentiated and strong absolute returns to institutional investors. We are confident that the combined fundamental credit research capabilities and complementary skills will greatly enhance the investment process and our ability to consistently deliver exceptional returns throughout the cycle.”
Robert Dafforn, Bybrook’s chief investment officer added: “The Bybrook partners are extremely pleased to be joining forces with Cairn Capital. As one of Europe’s leading CLO franchises for many years, Cairn Capital provides Bybrook with even broader research coverage, which is sure to drive strong returns within stressed/distressed and special situations over the years to come. We are excited that we will be able to provide full credit markets solutions to clients via the enhanced and expanded platform.”
Alberto Nagel, chief executive officer of Mediobanca, concluded: “In the past five years we have fostered Cairn Capital’s growth and today, in welcoming Bybrook, we will broaden its investor appeal, raise new capabilities and achieve positive synergies positioning the combined entity in the higher margin segment.”