Navigator Global Investments Limited (‘Navigator’ or the ‘Company’) received shareholder approval at its 2023 Annual General Meeting held on 27 October 2023 to accelerate and restructure the outstanding 2026 redemption payment to Blue Owl, Inc and its associates ('Blue Owl', previously Dyal Capital Investors) and acquire the remaining profit distributions from the six minority ownership interests in leading established alternative asset managers (the ‘Portfolio’) from 1 July 2023.
Since the initial acquisition of the Portfolio from Blue Owl in 2021, the Portfolio has been performing strongly and above expectations, delivering Navigator with a high quality and diversified earnings stream with embedded growth.
The Portfolio includes minority ownership interests in Bardin Hill Investment Partners, Capstone Investment Advisors, CFM, MKP Capital Management, Pinnacle Asset Management and Waterfall Asset Management. The Portfolio represents a well-diversified group of established firms with strong leadership and long track records of delivering results to their clients through multiple market cycles. Collectively, these firms manage approximately $49.9 billion of AUM across 32 diversified investment strategies.
Under the terms of the transaction, Blue Owl will receive total consideration of $200 million payable at Closing, in exchange for early settlement of the redemption payment liability brought forward from April 2026 and the incremental FY24 and FY25 cash distributions that Dyal would have been entitled to prior to April 2026.
The total consideration will be funded through a $120 million placement to Blue Owl at A$1.40 (‘Placement’) and an $80 million non-renounceable, non-underwritten entitlement offer to all Navigator shareholders and noteholders (‘Capital Raising’) to be executed following receipt of requisite regulatory approvals for the transaction. Following Closing of the transaction, Blue Owl is expected to own up to 46.5% of Navigator ordinary shares and have pro forma economic ownership (including Navigator ordinary shares and convertible notes) of approximately 51% of Navigator.
Under the term sheet, an independent board structure will be maintained, with Blue Owl retaining its existing Board nominee right at Closing, as well as being granted one additional Board observer. Blue Owl has also agreed to voluntarily enter into a 180 day escrow period for all of its current shares4 and enter into an escrow period on customary terms for the shares and convertible notes it receives under the Placement and Entitlement Offer until the release of Navigator’s FY26 results announcement. These arrangements reflect Blue Owl’s long term conviction and continued partnership in the Navigator business, providing a platform for further growth and collaboration.
The transaction has a compelling rationale and accelerates Navigator’s delivery on its strategic priorities while repositioning to unlock substantial shareholder value. The transaction is expected to deliver a material increase in scale, cash flows and earnings with a strengthened balance sheet through the full extinguishment of the redemption payment liability. In addition, the transaction is expected to deliver strong, longer-term shareholder returns and increase Navigator’s ability to undertake new investments and growth initiatives in the alternative asset management sector.
Navigator Chairman, Michael Shepherd said, “We believe this is a compelling strategic initiative that is expected to deliver strong shareholder value. This proactive initiative positions the Company for future growth. We are excited to have a committed partner with ongoing alignment with other shareholders to continue to execute on Navigator’s proven strategy in place to undertake further growth initiatives in the alternative asset management sector in the near term.”
Whilst the transaction has received shareholder approvals under ASX Listing Rule 7.1 and item 7, section 611 of the Corporations Act, it is still subject to a number of regulatory approvals which are in progress. The launch of the Capital Raising will occur following receipt of these regulatory approvals, with the expectation it will Close towards the end of the 2023 calendar year. There is, however, the possibility of the Capital Raising being delayed until the first quarter of 2024.
The Directors and Blue Owl have also committed to take-up all of their entitlements in the Capital Raising.