Waterfall Asset Management has made a takeover offer worth £639.2m to British investment trust Alternative Credit Investments (ACI).
The US-based asset manager has offered 870p per share in cash to the shareholders of the UK trust, which was formerly called Pollen Street Secured Lending. In October 2020, Waterfall became ACI’s investment manager.
ACI’s directors consider that the terms of the acquisition are fair and reasonable.
The takeover is planned to be executed through a court-sanctioned scheme of arrangement by Waterfall EIT UK, a newly created company owned by funds managed by Waterfall.
ACI chairperson Simon King said: “The Board welcomes and unanimously recommends the Offer from Waterfall, which we believe is the best outcome for shareholders, providing liquidity and certainty.
“The offer already has the support of holders of 40.8% of the Company’s shares and we urge undecided shareholders to consider the advantages of this firm cash offer against the alternatives in highly uncertain markets.”
ACI was established in 2014 as P2P Global Investments for pursuing investments in credit assets.
In 2017, the company accepted a joint offer from Pollen Street Capital and MW Eaglewood Europe to manage it following their merger.
Currently, ACI has a portfolio of investments in small private credit assets across SME, consumer, real estate, and trade finance asset classes in the US and Europe.
Waterfall said that ACI’s portfolio fits well within its existing portfolio and asset management experience.
It also added that it has existing relationships with several strategic partners of the UK investment trust.
Waterfall partner Patrick Lo said: “As an experienced asset manager in the structured credit market, we believe that the Acquisition represents an attractive opportunity to secure a portfolio of assets that fits with our existing investment strategy, while seeking to provide ACI Shareholders with certain and timely liquidity at an attractive price.”
Waterfall revealed plans to reposition the assets of the UK firm from a high-cost evergreen portfolio to a low-cost amortising portfolio, thereby ending reinvestments into new opportunities to enable a portfolio run-off.
The acquisition is anticipated to close during Q1 2021, subject to regulatory approvals and other conditions.
