Assured Investment Management (AssuredIM), which runs the institutional asset management business of Assured Guaranty Ltd., and some of its affiliated asset management companies, will be acquired by asset management firm Sound Point Capital Management.
Insurers Assured Guaranty Municipal Corp. and Assured Guaranty Corp. “will also engage Sound Point as their sole alternative credit manager to invest $1 billion over time in alternative credit strategies, including nearly $400 million currently managed by AssuredIM as of December 31, 2022,” according to a press release.
In return, Assured Guaranty is expected to receive a 30% ownership stake in the combined business. The deal is expected to close in the third quarter of 2023.
Upon completion of the deal, AssuredIM will transfer to Sound Point assets under management totaling about $15,2 billion, including about $14.5 billion of collateralized loan obligations as of the end of 2022. Through this, Sound Point, which had $32 billion in total AUM at the end of last year, is expected to become the fifth largest CLO manager in the world by AUM, per a release.
The deal advances two of Assured’s goals: establishing “a fee-based earnings stream independent of the risk-based premiums generated by our financial guaranty business” and enhancing “the alternative investment opportunities for our financial guaranty subsidiaries’ investment portfolios,” according to Dominic Frederico, president and CEO of Assured Guaranty.
“We expect this transaction to significantly benefit both Assured Guaranty and Sound Point and to be accretive to Assured Guaranty’s shareholders,” he said. “Our investment in Sound Point should provide significant incremental value because the combined business will benefit from Sound Point’s scaled investment platform, as well as both firms’ established distribution channels and well-earned reputations for generating attractive returns for their investors.”
The technology and systems used by Sound Point and Assured-IM together will accelerate and enhance reporting capabilities, the firms said. With the help of each firm’s current procedures and prior knowledge, the combined team will concentrate on maintaining strict operational controls, according to a separate press release.
“This is a watershed event in Sound Point’s growth story, and it positions us for continued success in a business where scale has become increasingly important,” said Stephen Ketchum, Sound Point’s founder and managing partner. “It’s our largest transaction to date, and we’re extremely proud to be receiving a one-billion-dollar investment commitment over time from Assured Guaranty. We’re thrilled to be expanding our diversified platform through a powerful new partnership that will create an immediate impact.”