CarVal is a leading global private alternatives (OTC) investment manager with approximately $14.3 billion in assets under management(1). The company focuses on opportunistic and non-performing loans, renewable energy infrastructure, specialty finance and transportation investments.
The acquisition is an important step towards AB’s goal to better serve AB’s clients by continuing to build and grow its highly regarded Private Alternatives business. CarVal employs 190 people, including 68 investment professionals, in five offices in four countries. The acquisition adds complementary investment capabilities in opportunistic and private lending to AB’s private alternatives platform. It also means geographical expansion in several regions, including North America, Europe, Latin America and Asia.
Clients are increasingly asking for private market strategies to increase revenue and diversify. It is precisely this capacity that CarVal brings as further additions to the Private Alternatives business, thereby strengthening AB’s position as a market leader. The acquisition expands AB’s Private Markets offering to nearly $50 billion in AUM(1) on a pro forma basis.
CarVal’s existing management team will continue to lead the company. CarVal’s operational teams will remain independent and will continue to operate from their headquarters in Minneapolis (USA) and their global offices without any changes to the current investment process or staffing. Going forward, they will benefit from AB’s broader resources, including global sales and product development.
“This acquisition reflects our company’s continued commitment to advancing AB’s Private Alternatives business,” said Seth Bernstein, AB’s CEO and President. “CarVal’s global footprint and broad range of services opens up new and exciting growth opportunities for AB as we diversify and expand our services to meet the evolving needs of our customers.”
“By joining forces with CarVal, we can meaningfully expand our global Private Alternatives platform,” said Matt Bass, Head of Private Alternatives at AB. “CarVal’s extensive market experience combined with the strong leadership team and collaborative culture aligns well with AB’s strategic priorities. We are convinced that by working closely with the CarVal team we will achieve a lot together in the future.”
“AB’s leadership structure, track record, values and platform make the company an excellent long-term business partner for CarVal and our investors. When it comes to corporate culture, operational execution and quality, there is a very high level of consistency,” comments Lucas Detor, Managing Principal of CarVal Investors. “This acquisition allows CarVal to grow while maintaining our independence in investments and day-to-day operations.”
This agreement is also an example of the multiple synergies between AllianceBernstein and Equitable, the two complementary and well-established companies of Equitable Holdings. Equitable has committed to inject $10 billion in investment capital from its General Account into AB’s Private Alternatives platform. Of this commitment, $750 million will be selectively allocated to CarVal strategies, further enhancing Equitable’s risk-adjusted earnings and driving AB’s drive to grow higher multiple, higher margin, lower capital businesses.
AB announced a definitive agreement to acquire 100 percent of CarVal for an upfront purchase price of US$750 million. In addition, a multi-year profit-sharing agreement was agreed if certain targets were reached. Upon closing of the transaction, which is expected in the second quarter of 2022, CarVal will become a wholly owned subsidiary of AllianceBernstein LP and will be renamed AB CarVal Investors. The transaction is subject to customary regulatory and closing conditions.
Citi acted as financial advisor and Wachtell, Lipton, Rosen & Katz acted as AB’s legal advisor. Rothschild & Co acted as financial advisor and Schulte Roth & Zabel LLP as legal advisor to CarVal.
(1) CarVal’s AUM includes approximately $9.9 billion in billable AUM and $4.5 billion in billable AUM. AB’s pro forma AUM consists of approximately $37.2 billion in chargeable and $12.0 billion in chargeable AUM. Deviations due to rounding are possible. Figures as of December 31, 2021.
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