Transaction Summary

On February 2, 2017, Hayfin Capital Management LLP ("Hayfin"), a prominent European credit platform managing €8.2 billion in assets, announced that the British Columbia Investment Management Corporation ("bcIMC") has agreed to acquire a majority shareholding in the firm from its current institutional investors. This transaction is designed to support Hayfin's long-term growth objectives and simplify its ownership structure while ensuring that Hayfin's management and employees continue to hold significant stakes alongside bcIMC.

bcIMC, a Canadian investment management firm overseeing approximately C$122 billion in assets, is set to acquire the entirety of the shares held by Hayfin’s existing institutional investors, which include TowerBrook Capital Partners, PSP Investments ("PSP"), the Ontario Municipal Employees Retirement System ("OMERS"), and The Future Fund. In addition to the share acquisition, bcIMC will contribute considerable capital to the funds managed by Hayfin, reinforcing its commitment to the firm's future development. Importantly, Hayfin will maintain its focus on managing third-party assets, and the day-to-day operations, investment strategies, and personnel decisions will remain independent post-transition.

The exact financial terms of the acquisition have not been disclosed, and the completion of the transaction is contingent upon regulatory approval.

Information on Hayfin

Established in 2009, Hayfin is recognized as a leading European credit platform, with a focus on providing tailored lending solutions primarily to medium-sized companies. Its diverse operations span various sectors, including corporate, maritime, and alternative credit. The firm was founded with backing from notable investors such as TowerBrook Capital Partners, OMERS, PSP, and The Future Fund. Hayfin is led by Tim Flynn, a former partner at Goldman Sachs, who plays a crucial role in steering the firm's strategic direction.

Industry Overview in Canada

The financial services industry in Canada is characterized by a robust framework that encompasses a diverse array of sectors including banking, asset management, and insurance. Canada boasts a relatively concentrated banking sector, consisting of a small number of large, well-capitalized banks, which have proven resilient even in times of economic uncertainty. This stability has fostered investor confidence and buoyed the market for institutional investment.

In addition to traditional banking, the Canadian asset management landscape is growing rapidly, fueled by increasing demand for alternative investments among institutional clients. With more institutions seeking to diversify their portfolios, firms like bcIMC that can provide access to innovative investment strategies are positioning themselves to capitalize on this trend.

Furthermore, the Canadian pension fund space represents a significant portion of the asset management sector, with institutional managers like bcIMC serving as critical players. These funds typically have long investment horizons, which allows them to pursue strategies that may involve riskier asset classes, contributing to the overall growth of the sector.

With a stable regulatory environment and a growing focus on ESG (Environmental, Social, Governance) criteria, Canada is also fostering an ecosystem that encourages sustainable investment practices, which will likely bolster the growth prospects of its investment management industry moving forward.

The Rationale Behind the Deal

The acquisition of Hayfin by bcIMC is strategically geared towards enhancing Hayfin's growth trajectory while simplifying its ownership structure. By securing a majority stake, bcIMC aims to streamline decision-making processes and provide Hayfin with increased resources to pursue new opportunities in the European credit market.

Moreover, this partnership allows Hayfin to leverage bcIMC's extensive network and capital base, which enhances its capacity to grow its lending solutions for medium-sized European companies. The commitment of additional capital from bcIMC signifies confidence in Hayfin's existing business model and its future potential.

Information about bcIMC

bcIMC is a preeminent investment management corporation in Canada, recognized as the fourth largest fund manager with approximately C$122 billion under management. It operates on behalf of 34 institutional clients, including 11 public sector pension plans. With a diversified investment strategy across various asset classes, bcIMC is committed to delivering superior investment performance and is well-regarded for its expertise in both domestic and international markets.

The firm’s strong track record in managing complex portfolios positions it as a formidable player in the investment management space, and its acquisition of Hayfin represents a strategic move to enhance its presence in the European credit landscape.

View of Dealert

In our expert opinion, the acquisition of Hayfin by bcIMC presents a compelling investment opportunity with several advantageous features. The strategic alignment between the two firms suggests potential synergies that could enhance growth prospects and financial performance.

The consolidation of ownership will facilitate greater control and oversight, allowing Hayfin to make more agile decisions in response to market dynamics. This could be particularly valuable in the fast-evolving credit market, where timely responses are critical to capturing emerging opportunities.

Moreover, bcIMC’s commitment to invest additional capital into Hayfin’s operations indicates a strong belief in the firm’s potential. The backing of bcIMC, a well-established investment manager with substantial assets, positions Hayfin favorably to expand its reach and capabilities in the European lending space, particularly among medium-sized enterprises.

Overall, this deal appears to enhance Hayfin’s growth prospects while positioning bcIMC to benefit from a robust player in the European credit market. If successfully executed, this acquisition could lead to substantial returns for both Hayfin's management and bcIMC in the long term.

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