French investment company Wendel will acquire U.S. asset investment firm Monroe Capital, it said on Tuesday, with an initial investment of $1.13 billion for 75% of the company’s shares.
With the acquisition, Wendel said it expects to benefit from the surge in demand for private credit solutions and to further build up its asset management business, providing it with recurring and growing cash flows, exposure to multiple and high performing asset classes, and aiming to generate double-digit shareholder returns.
On the choice of Monroe as an acquisition target, Wendel Group CEO Laurent Mignon, on a call with journalists, pointed to a historically more extensive asset management market in the United States, at a time when the economy there is developing at a faster pace than in Europe.
The acquisition will increase Wendel’s exposure to the U.S. to about 30% of invested assets from 20%, Mignon said.
While focusing on the integration of Monroe, Wendel would still consider further M&A activity, notably in the infrastructure and secondary market, he added.
In October 2023, Wendel announced the acquisition of private equity firm IK partners for 383 million euros ($404 million), as part of its strategy to build up an asset management arm to boost fees-based sales.
Wendel’s asset management platform is expected to generate about 185 million euros ($200 million) of pre-tax profit in 2025, the group said in a statement.
Wendel said it would also invest $1 billion in Monroe’s capital and may pay up to 250 million euros for the remaining 25% of the U.S. company over 2028-2032 depending on the growth of Monroe’s fee-related earnings.
The transaction, expected to close in the first half of 2025, will be financed by Wendel’s own resources and bring the group’s loan-to-value (LTV) ratio to about 19% from 5% at the end of June.
Monroe Capital will retain its brand and continue to operate autonomously with the group’s investment committee remaining independent, it added.
Source: Reuters.com