Patria Investments (Patria) (NASDAQ: PAX), a global alternative asset manager, is to combine with Moneda Asset Management (Moneda), an asset manager headquartered in Chile.
The merger will create an investment platform in Latin America, with USD25.9 billion in assets under management focused on private equity, infrastructure and credit investments in the region.
The combination will enhance Patria’s product offering by adding the largest credit investment platform in Latin America. It will also create the number one Private Investments in Public Equities (PIPE) manager in the region. The combination of the two operations will add geographical exposure within Latin America through client base and product offering and will open the opportunity for cross selling, leveraging a complementary investor base.
With more than USD10 billion in assets under management across credit and public equities, Moneda is a leading investment firm in Latin America, with more than 25 years of history and a track record of top quartile performance, profitability and growth. Moneda also has a robust bottom-up investment strategy that drives alpha generation.
“Our leadership team is thrilled that both companies are coming together. We are quickly delivering on the expansion strategy that we presented during our initial public offering earlier this year,” says Alexandre Saigh, Patria’s CEO. “The transaction will be accretive to earnings per share within the first year.”
The combined platform will manage over USD9.7 billion in private equity, USD5.5 billion in credit (including US$650 million exposure to private credit), USD5.1 billion in infrastructure, USD2.0 billion in advisory & distribution, USD3.0 billion in PIPE and public equities and USD500 million in real estate investments, in most cases with top quartile returns.
“Complementary is the word that defines this transaction,” says Olimpio Matarazzo, senior managing partner and chairman of the board at Patria. “The product offerings and the geographical and currency exposures are a perfect fit. Patria is a leader in Private Equity and Infrastructure investments in Latin America, and Moneda is the top credit investor in the region. In addition, both companies have a similar culture, based on partnership and exceptional client service.”
“This combination will leverage Moneda’s outstanding track record and deal sourcing capabilities to lead the development of private credit in Latin America with unique local expertise while also continuing to develop our strategic investments in public equities in the region,” says Pablo EcheverrÃa, Moneda’s chairman.
“With Patria, we will have the opportunity to expand our cross selling of products, leveraging a complementary investor base,” says Alfonso Duval, Moneda’s CEO. “It is worth noting that both companies are partnerships led by like-minded, entrepreneurial teams. There’s been a strong cultural alignment among the teams since the onset.”
Under the agreement, Moneda partners will receive an upfront consideration of USD315 million, in a combination of USD128 million in cash and USD187 million in PAX Class B common stock. There will be an additional consideration payable in years two and three after closing, subject to certain retention metrics for Moneda’s partners, and a potential earnout payable after 2023, in a combination of cash and PAX Class A common stock, subject to the achievement of certain revenue and profitability targets.
The transaction is expected to close by the end of 2021, subject to regulatory approvals and certain other customary conditions.
In connection with the transaction, Patria retained JP Morgan Chase & Co, as financial advisor, Simpson Thacher & Barlett LLP, as transaction counsel, and Carey Abogados, as Chilean counsel. Moneda retained Servicios Financieros Altis SA, as financial advisor, Skadden, Arps, Slate, Meagher & Flom LLP, as transaction counsel, and Barros & Errazuriz Abogados, as Chilean counsel.
