Wafra Makes Profit Selling Back Ownership of DigitalBridge’s Investment Management Group
Posted on 04/18/2022
DigitalBridge Group, Inc. (NYSE: DBRG) entered into an agreement with affiliates of Wafra Inc. to acquire Wafra’s 31.5% ownership in DigitalBridge’s investment management subsidiary (DigitalBridge IM) for US$ 410 million of newly issued Class A common stock in DigitalBridge and cash consideration of US$ 390 million, subject to certain net cash and closing adjustments.
Benefits of the transaction for DigitalBridge and its shareholders is that DigitalBridge’s share of DigitalBridge IM fee-related earnings will increase to 100%. Additionally, DigitalBridge will be entitled to 100% of DigitalBridge IM’s corporate share of performance fees (carried interest) on future fund offerings.
Upon completion of the transaction, Adel Alderbas, Chief Investment Officer of Wafra, will serve as a Senior Advisor to DigitalBridge. In addition to the transaction consideration of US$ 800 million, Wafra will have rights to an earnout of up to US$ 125 million, subject to certain future performance thresholds, which may be paid up to 50% in stock at the DigitalBridge’s election. The US$ 390 million of cash consideration, subject to certain net cash and closing adjustments, will be funded by cash-on-hand from DigitalBridge’s balance sheet. The transaction is expected to close during the second quarter of 2022, subject to regulatory clearance and other customary closing conditions.
Wafra was advised by Ardea Partners LP as financial advisor and Fried, Frank, Harris, Shriver & Jacobson LLP as legal advisors. DigitalBridge was advised by Barclays as financial advisor and Sullivan & Cromwell as legal advisors.
Transition to Conventional C-Corp
DigitalBridge also announced that its Board of Directors has approved the transition to a conventional C-Corp structure and DigitalBridge will not be treated as a Real Estate Investment Trust (REIT) for tax purposes in 2022.
Wafra is owned by Public Institution for Social Security (PIFSS).