The enlarged asset management company will have a post-transaction market capitalisation of around $12.5bn

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Owl Rock and Dyal Capital announce merger to create Blue Owl Capital. (Credit: Gerd Altmann from Pixabay)

Owl Rock Capital Group and Dyal Capital Partners have agreed to combine their businesses to create a US-based alternative asset management firm called Blue Owl Capital with more than $45bn in assets under management.

Based in New York, Owl Rock Capital is a direct lending platform with about $23.7bn of assets under management as of 30 September 2020.

On the other hand, Dyal Capital is engaged in buying minority equity stakes in and giving financing to established alternative asset managers. Dyal Capital is a division of investment manager Neuberger Berman Group.

The newly created asset management firm will be subsequently merged with Altimar Acquisition, a special purpose acquisition company (SPAC). This will enable Blue Owl Capital to be listed on the New York Stock Exchange (NYSE).

Altimar Acquisition is sponsored by Altimar Sponsor, an affiliate of HPS Investment Partners.

The newly formed asset management company will have a post-transaction market capitalisation of around $12.5bn.

Dyal Capital founder Michael Rees said: “Our businesses will combine robust growth and a strong margin profile with a high level of earnings visibility and stability, offering investors a compelling way to access the alternative asset management industry.”

The deal is expected to provide nearly $1.8bn in gross proceeds, made up of Altimar Acquisition’s $275m of cash held in trust and a $1.5bn fully committed, oversubscribed, common stock private investment in public equity (PIPE) at $10 per share.

The PIPE investors include ICONIQ Capital, CH Investment Partners, the Federated Hermes Kaufmann Funds, Koch Companies Defined Benefit Master Trust, and Liberty Mutual Investments.

As per the terms of the deal, the existing shareholders of Owl Rock and Dyal Capital will have nearly 85% stake in Blue Owl Capital post-merger. Blue Owl Capital’s founders and senior managers will retain their equity stakes after the transaction.

Owl Rock Capital co-founder Doug Ostrover said: “Blue Owl’s expertise, agility and scale, supported by a substantial permanent capital base, will enable us to offer a holistic platform of capital solutions to private equity firms and privately held businesses.

“We believe this will broaden and deepen our relationships and provide us with unrivaled access to compelling investment opportunities. In addition, this permanent capital base will allow Blue Owl to continue to strongly grow its business in a consistent and predictable manner.”

Ostrover will be the CEO of Blue Owl Capital.

The deal is subject to approvals of applicable shareholders of Owl Rock, shareholders of Altimar Acquisition, and meeting of other conditions. It is expected to be closed in the first half of next year.