Paulson agrees to buy stake in asset manager from HNA
Hedge fund is expected to own about 25% of the ordinary shares of BrightSphere
John Paulson’s hedge fund agreed to buy a stake in a $238 billion (U.S.) asset manager from Chinese conglomerate HNA Group Co.
Paulson & Co. plans to buy most of the ordinary shares of BrightSphere Investment Group PLC held by a unit of HNA, the New York-listed asset manager said in statement. Once completed, Paulson & Co. is expected to own just less than 25% of the ordinary shares of BrightSphere, which recently had a market capitalization of about $1.36 billion.
BrightSphere was previously called OM Asset Management and was known as the American investment arm of U.K. insurer Old Mutual PLC. HNA, one of China’s largest privately held conglomerates, agreed to pay $446 million for a 24.9% stake in the business about a year and a half ago, be- fore it was renamed. On Monday evening, BrightSphere disclosed that Paulson paid $12.80 a share for an initial portion of its purchase, totaling around $59 million. The hedge fund will pay $13.95 a share for a second and larger tranche of stock after the deal receives various regulatory approvals.
HNA will likely lose some money on the sale. The asset manager’s shares were trading higher than $14 in March 2017 when HNA’s purchase was unveiled.
HNA, which is based in the Chinese province of Hainan, owns airlines, hotels and other assets at home and abroad. It has been planning to sell or exit the majority of its overseas investments made in recent years, including shedding its entire stake in Deutsche Bank AG, the Journal reported previously.
HNA is the largest holder of BrightSphere’s stock, followed by Fidelity Investments Inc. and BlackRock Inc., according to data from S&P Global Market Intelligence.
Mr. Paulson’s hedge fund bought some BrightSphere stock earlier this year, holding about 612,000 shares at the end of September, according to a regulatory filing. Those shares were recently worth around $7.8 million.
In a statement, Mr. Paulson said he intends to be a longterm strategic shareholder in BrightSphere, which invests in boutique asset managers on behalf of institutional investors.
The purchase comes about a decade after Mr. Paulson made his fortune betting big against subprime mortgages. His hedge fund has struggled in recent years, as the firm now manages a fraction of what it once did. In 2011, he managed about $38 billion. As of last year, it was closer to $9 billion, most of it Mr. Paulson’s own money, The Wall Street Journal has reported.
The wave of planned divestments by HNA follows a recent mandate from Beijing for the company to return to its core business of operating Chinese airlines, people familiar with the company previously told the Journal.
HNA once pursued SkyBridge Capital, the investment firm founded by former White House communications chief Anthony Scaramucci. HNA dropped its bid this year after resistance from a U.S. national security panel.