Hello and welcome back to the Fides Weekly Update. Check in here to find out what’s been happening in your industry this week. Scroll down to read our regular feature Movers & Shakers of the week.
1. Brookfield buys majority stake in Oaktree to become one of the world’s largest alternative asset managers
Brookfield Asset Management announced on Wednesday that it was buying a majority stake in Oaktree Capital Management in a $4.7 billion deal, creating one of the world’s largest alternative asset managers.
Brookfield will acquire a 62 per cent stake in Oaktree, with the combined businesses having about $475 billion of assets under management and $2.5 billion of annual fee-related revenue.
Lead competitor Blackstone Group reported $472 billion at year-end, although this did not include debt owed to the firm which would increase AUM to $650 billion a spokesperson said.
The deal will bolster the credit business of Brookfield, which has traditionally focused on real estate, infrastructure and renewable power. It also provides Oaktree, a specialist in distressed debt, exposure to assets that thrive in turbulent economic times.
The decision by Oaktree, led by 72 year old billionaire Howard Marks, comes after a sustained period in which its stock has underperformed the broader market. Shares in the firm, which has $120bn in assets under management, are 13% down over the past 5 years and have performed disappointingly since the firm floated it on the public markets in 2012.
Both companies will continue to operate as independent businesses, while Marks will join Brookfield’s board of directors. However, the terms of the transaction allow Brookfield to take full ownership of Oaktree by 2029.
This could spur further investment industry deals as alternative asset managers face pressure to broaden their offerings as institutional investors seek to make big allocations to fewer firms.
Oaktree is the second U.S. alternative asset manager to sell itself in recent years, since Fortress Investment Group agreed to be acquired by Japan’s SoftBank Group Corp for about $3.3 billion in 2017.
2. Another week, another law firm IPO…
As DWF commences its first day of trading on the London Stock Exchange today, news this week has focused on the outcomes for the firm partners, with various members of senior management expected to fare well as a result of the listing.
Releasing 26% of its share capital to the public, DWF partners will retain majority share, but will have their lock-in period amended to allow for 20% of their capital to be released after the first year of trading. Offer price for the available 26% has been set at 122 pence a share, which values the business at £366 million – the highest law firm listing value in the UK to date.
Some of the key members due to make £1m+ from the IPO include:
- Sir Nigel Knowles – Chairman
- Andrew Leaitherland – Managing Partner and CEO
- Chris Stefani – CFO
- Helen Hill – Director of HR
- Partners and department heads Matthew Doughty, Stefan Paciore and Glynn Jones
DWF Managing partner Andrew Leaitherland expects this deal to allow the firm to achieve a greater scope of international reach and scale, capitalising on its ability to offer tech-driven alternative legal services in response to high client demand for more flexible solutions. The firm’s prospectus also highlights its “high quality client base across variety of sectors” and “an understanding of client needs in an international context” as a further strategic target for growth, delivering repeat client revenue.
Although law firm IPOs are becoming relatively commonplace in today’s marketplace, securing a premium listing on the Main Market is a ground-breaking move in the UK legal sector, with all previous law firm IPOs having executed flotations on the AIM Market.
The first ever law firm listing took place in 2007 by Slater & Gordon, with Gateley floating on London AIM market in June 2015. In 2017, two further firms announced their intentions to go public, as Gordon Dadds and Keystone Law both joined the LSE’s AIM in August and November respectively. The most recent law firm IPO was made by Rosenblatt, whose first day of trading began in May 2018.
Clifford Chance and Allen & Overy advised on the DWF IPO, with Stifel Nicolaus and Jefferies operating as joint bookrunners.
Movers & Shakers of the week
Fergus Wheeler makes the move to White & Case from US rival King & Spalding
Linklaters insurance partner Victoria Sander is set to join Latham’s London base next month
Ince & Co’s Hong Kong office has hired partners Eric Lui and Ian Lo and a team of more than 10 fee earners from local firm ONC Lawyers, including senior disputes associate Alfred Lau, who will join in April as a partner.
Mergers & Alliances
Office Openings & Closings
Inclusion & Diversity
Innovation and Technology