Chicago-based private equity firm GCM Grosvenor said Monday it will become a publicly traded company after a merger with an affiliate of the New York investment firm Cantor Fitzgerald.
GCM Grosvenor, which reports $57 billion in assets under management, said it will merge with CF Finance Acquisition, a Nasdaq-listed company. The combined firm will use the GCM Grosvenor name and be led by its senior managers, including Chairman Michael Sacks.
Cantor Fitzgerald, shareholders of CF Finance and other investors will own less than 30% of the new company. The deal values GCM Grosvenor at $2 billion.
Executives said the merger, subject to approval of CF Finance shareholders, should close in the fourth quarter.
Terms calls for Cantor Fitzgerald to provide $30 million and for institutional investors to buy $195 million in shares at $10 each.
“We believe that becoming a publicly listed company will benefit our clients, our team members and all of our stakeholders,” Sacks said. “We have long valued having external shareholders and we wanted to preserve the accountability and focus that comes with that.”
Sacks is an investor in Sun-Times Media.
GCM Grosvenor said there will be no change in the firm’s investment and operational practices. It said cash from the deal will be used to pay down debt, expand the business and pay $150 million to selling shareholders, including Hellman & Friedman, which has had a minority stake in GCM Grosvenor since 2007.
“We have long respected the GCM Grosvenor management team, their culture and continued ability to deliver for their clients,” said Howard Lutnick, chairman of both Cantor Fitzgerald and CF Finance. “We look forward to their growth and success as a public company.”
A source said the new outside investors include Citigroup banker Michael Klein.
Aside from its Chicago base, GCM Grosvenor has offices in New York, Los Angeles, London, Tokyo, Hong Kong and Seoul. It invests clients’ money in a variety of strategies.
CF Finance is a type of special purpose acquisition company, sometimes called a “blank check company,” that raises money through a stock offering to fund a future merger or acquisition. Its shares traded at $10.41 Monday, down 7 cents for the day.
