GAM, the Swiss multi-asset class independent asset manager with CHF 124.2bn (c.£81bn; c.€114.5bn) under management, has acquired Renshaw Bay’s c.£770m predominantly UK and German commercial real estate whole loan lending platform.
The definitive agreement to buy Renshaw Bay was announced this morning by GAM, as part of its on H1 financial results, ending the uncertainty over the business after founder Bill Winters left to join Standard Chartered in May succeeding Peter Sands as CEO in June.
Under the terms of the deal, the entire real estate team of 10 investment specialists – including Martin Farinola who joined from Goldman Sachs three years ago – will transfer to GAM, where it will continue to be led by Jon Rickert, head of real estate finance at Renshaw Bay.
Rickert was hired by Winters three and a half years ago to set up the real estate debt platform at Renshaw Bay, which sourced seed capital from Jacob Rothschild’s RIT Capital Partners and South African billionaire Johann Rupert’s Reinet Investments.
GAM’s acquisition, structured as an asset purchase, is expected to close in October 2015, when the management of Renshaw Bay’s real estate strategies, including all existing client relationships, will be transferred across. GAM was previously named Swiss & Global Asset Management.
The cost of the acquisition, to be disclosed by GAM in its 2015 annual results next March, is comprised of an upfront cash payment to Renshaw Bay’s shareholders plus a contingent payment settled over a period of five years. This is likely to be performance-linked to Renshaw’s lending platform under GAM’s ownership.
The acquisition marks GAM’s entry into private market real estate finance, complementing its existing dual strand business lines of: the CHF 73.5bn (c. €67.7bn; c. £47.9bn) investment management business, more than 80% of assets are split across fixed income, equity and absolute return mandates; and the CHF 50.7bn (c. €46.7bn; c. £33.0bn) private labelling business where GAM provides fund service solutions to third parties.
Over the coming months, the team will launch new strategies under the GAM brand, investing in senior and mezzanine debt backed by real estate in the UK and Continental Europe.
Renshaw Bay announced the final closure of its commercial real estate debt fund, Renshaw Bay Real Estate Finance Fund L.P., in March, raising £356m of equity from three investors, a UK local authority, a US-based Family Trust and an increased allocation from a Global Private Bank.
The fund’s strategy is focused on direct, whole loan origination of commercial real estate loans in Western Europe (predominantly the UK and Germany). By which time, the real estate debt team has deployed £179m to 14 commercial real estate loans.
Separately, Renshaw Bay was awarded a £350m UK debt mandate for high yielding, fixed-rate senior loans from Guardian Financial Services in October 2013.
Alexander Friedman, GAM’s Group CEO, said: “The persistent low-yield environment makes private market real-estate investments enormously attractive. As an asset class, it is a prime area for active managers to excel – and one we have not offered to our clients in the past.
“It will further diversify our business mix, adding a sustainable stream of revenues tied to long-term capital commitments. We greatly look forward to working with this terrific group of experienced investors and risk managers.”
Jon Rickert, head of real estate finance at Renshaw Bay: “We are delighted to join a company with such deep resources and rich heritage. In particular, we are attracted by GAM’s genuine belief in independent thinking and conviction investing. We are convinced that this will be very appealing and beneficial for our clients.”
Bill Winters, founder of Renshaw Bay: “GAM is the ideal home for Jon Rickert and his team. As a company with world-class investment talent, it will be a great cultural fit, giving clients the reassurance of utmost continuity in how their capital is managed.”
GAM said the acquisition of Renshaw Bay will be accretive from day one.