GCM Grosvenor, an alternative asset manager, and CF Finance Acquisition Corp, a blank check company that’s backed by Cantor Fitzgerald, have agreed to merge. The transation puts GCM Grosvenor at a valuation of $2 billion. The newly combined company will run as GCM Grosvenor Inc and trade on the NASDAQ. J.P. Morgan served as financial advisor to GCM Grosvenor while Cantor Fitzgerald acted as financial and capital markets advisor to CFAC.
CHICAGO, Aug. 3, 2020 /PRNewswire/ — GCM Grosvenor, a global alternative asset management firm, will become a public company through a merger with CF Finance Acquisition Corp. (“CFAC”) (NASDAQ: CFFA), a special purpose acquisition company sponsored by Cantor Fitzgerald, a leading global financial services firm. The companies announced today that they have entered into a definitive agreement to effect the transaction. The combined company will operate as GCM Grosvenor Inc. and expects its Class A common stock to be listed on the NASDAQ stock exchange. GCM Grosvenor’s existing senior management team, led by Chairman & CEO Michael J. Sacks, will continue to lead the business. The transaction values GCM Grosvenor at $2 billion.
Upon the completion of the transaction, GCM Grosvenor management will own in excess of 70% of the equity interests of the combined company – consistent with their historic ownership level of the firm – and will continue to lead all functions of the business with the same discipline, intensity and accountability that have driven the firm’s growth and success to-date. Entities affiliated with Hellman & Friedman (“H&F”), a minority investor in GCM Grosvenor since 2007, will sell their equity interest in connection with the completion of the transaction.
As a publicly listed company, GCM Grosvenor will continue to operate with the same “client first” culture that has guided the firm since its inception almost 50 years ago. In addition, GCM Grosvenor will gain added liquidity and financial flexibility, enabling it to increase its investment in the business and further strengthen its commitment to serving its clients across the broad spectrum of the alternative asset management arena. There will be no change to GCM Grosvenor’s investment and operational processes, and the firm will continue to drive its leadership of best-in-class practices within the alternative asset industry, including with ESG and Impact Investing. GCM Grosvenor management believes the transaction will further elevate the company’s ability to attract and retain top-tier industry talent through access to broader, more flexible incentives for its employees.
“We believe that becoming a publicly listed company will benefit our clients, our team members and all of our stakeholders,” said Mr. Sacks. “We have long valued having external shareholders and we wanted to preserve the accountability and focus that comes with that. We thank the H&F team for their partnership and support over the years and look forward to welcoming our public shareholders in this next chapter of our 50-year corporate history.”
“We have long respected the GCM Grosvenor management team, their culture and continued ability to deliver for their clients,” said Howard W. Lutnick, Chairman and CEO of CFAC and Chairman and CEO of Cantor Fitzgerald. “We look forward to their growth and success as a public company.”
CF Finance Acquisition Corp. is a NASDAQ listed special purpose acquisition company sponsored by Cantor Fitzgerald.
Summary of Transaction
The transaction, unanimously approved by the board of directors of CFAC, is expected to be completed as soon as practicable, subject to approval by the stockholders of CFAC, the effectiveness of a registration statement to be filed with the SEC in connection with the transaction, and other customary closing conditions. The board of directors of CFAC has unanimously approved the proposed transaction.
At closing, the public company’s name will be changed to GCM Grosvenor Inc.
In connection with the transaction, the CFAC Sponsor will forfeit one-third of their class B shares, further enhancing the transaction’s value.
Upon closing, it is expected that GCM Grosvenor management will own more than 70% of the outstanding shares of the combined company, modestly higher than its historic ownership. Pursuant to the terms of the transaction agreement, H&F’s equity interest in the company will be purchased according to the terms of a pre-existing option. Current CFAC stockholders, including Cantor Fitzgerald, and additional institutional investors will own the remaining outstanding shares of the combined company. Subject to the closing of the transaction between GCM Grosvenor and CFAC, these additional institutional investors have committed to participate in the transaction through a $195 million private investment in public equity (“PIPE”) at $10.00 per share. Cantor Fitzgerald will also invest an additional $30 million at closing of the transaction.
Before giving effect to any redemptions by the public stockholders of CFAC, the cash held in CFAC’s trust account, together with the $195 million in PIPE proceeds and $30 million investment from Cantor Fitzgerald, will be used to pay $150 million cash consideration to selling shareholders, including H&F, pay transaction expenses, reduce GCM Grosvenor’s existing indebtedness, and fund GCM Grosvenor’s future growth.
Upon closing of the transaction, the board of GCM Grosvenor Inc. will be chaired by Mr. Sacks and will also include Jon Levin, President of GCM Grosvenor, and five additional directors, at least three of whom will be independent.
J.P. Morgan served as exclusive financial advisor to GCM Grosvenor. Latham & Watkins LLP served as legal counsel to GCM Grosvenor.
Cantor Fitzgerald & Co. acted as financial and capital markets advisor to CFAC and The Klein Group, LLC acted as M&A advisor to CFAC. Hughes Hubbard & Reed LLP and Ellenoff Grossman & Schole LLP served as legal counsel to CFAC.
J.P. Morgan and Cantor Fitzgerald & Co. served as placement agents for the PIPE financing.
About GCM Grosvenor
GCM Grosvenor is a global alternative asset management solutions provider with approximately $57 billion in assets under management across private equity, infrastructure, real estate, credit, and absolute return investment strategies. The firm is in its 50th year of operation and is dedicated to delivering value for clients in the growing alternative investment asset classes.
GCM Grosvenor’s experienced team of 485 professionals serves a global client base of institutional and high net worth investors. The firm is headquartered in Chicago, with offices in New York, Los Angeles, London, Tokyo, Hong Kong, and Seoul. For more information, please visit: www.gcmgrosvenor.com.
About CF Finance Acquisition Corp.
CF Finance Acquisition Corp. is a public investment vehicle formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. CFAC is led by its Chairman and Chief Executive Officer, Howard W. Lutnick, who is also the Chairman and Chief Executive Officer of Cantor Fitzgerald. CFAC’s securities are traded on the Nasdaq Capital Market under the ticker symbols CFFA, CFFAW and CFFAU. CFAC raised approximately $282 million of cash proceeds in an initial public offering in December 2018.
About Cantor Fitzgerald
CF Finance Acquisition Corp. is sponsored by Cantor Fitzgerald. Cantor Fitzgerald, with over 12,000 employees, is a leading global financial services group at the forefront of financial and technological innovation and has been a proven and resilient leader for over 70 years. Cantor Fitzgerald & Co. is a preeminent investment bank serving more than 5,000 institutional clients around the world, recognized for its strengths in fixed income and equity capital markets, investment banking, prime brokerage, and commercial real estate and for its global distribution platform. Cantor Fitzgerald & Co. is one of the 24 primary dealers authorized to transact business with the Federal Reserve Bank of New York. For more information, please visit: www.cantor.com.