Wafra to Convert 31.5% Ownership Position in
DigitalBridge's Investment Management Subsidiary to DigitalBridge
Group, Inc. Corporate Level
Accretive Transaction to Result in 100%
DigitalBridge Ownership of Fast-Growing Digital IM Platform
DigitalBridge to Transition to Conventional
C-Corp, Providing Additional Strategic Flexibility to Continue
Rapid Growth and Streamline Corporate Structure
DigitalBridge Group, Inc. (NYSE: DBRG) (“DigitalBridge” or the
“Company”) today announced it has entered into an agreement with
affiliates of Wafra Inc. (“Wafra”) to acquire Wafra’s 31.5%
ownership in DigitalBridge’s investment management subsidiary
(“DigitalBridge IM”) for $410 million of newly issued Class A
common stock in DigitalBridge and cash consideration of $390
million, subject to certain net cash and closing adjustments.
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Marc Ganzi, Chief Executive Officer of DigitalBridge, said,
“This announcement marks a natural evolution of our successful
partnership with Wafra, driven by the success and speed of our
asset rotation to 100% digital and rapid growth in our
DigitalBridge IM platform. It also underscores Wafra’s continuing
confidence in our ability to pursue and execute on the industry’s
most compelling digital infrastructure investment opportunities. I
look forward to continuing to work with the entire team at Wafra as
we raise and deploy new capital in the sector as their partner of
choice.”
Benefits of the transaction for DigitalBridge and its
shareholders, which advances the Company’s successful partnership
with Wafra from a subsidiary to the corporate level, include:
- Immediately Accretive to Earnings Upon Completion:
DigitalBridge’s share of DigitalBridge IM fee related earnings
(“FRE”) will increase to 100%. 2022 run-rate FRE is expected to
increase by $38 million, or 46%, assuming the midpoint of the
Company’s 2022 guidance. Additionally, DigitalBridge will be
entitled to 100% of DigitalBridge IM’s corporate share of
performance fees (carried interest) on future fund offerings.
- 100% Ownership of High-Growth DigitalBridge IM Platform:
The Company’s high-growth, high-ROIC DigitalBridge IM business is
projected to grow FRE organically at over 20% through the forecast
range while generating strong cash flows and high incremental
margins.
- Simplification and Alignment: Streamlines and simplifies
DigitalBridge’s corporate ownership profile and further aligns the
Company’s shareholders and limited partners.
Mr. Ganzi continued, “This accretive transaction will drive an
immediate and substantial increase in earnings to DigitalBridge
shareholders, raising their exposure to our high-growth,
high-return investment management platform just as we are poised to
continue scaling our full-stack strategy. It also further
demonstrates our commitment to deploying balance sheet capital to
its 'highest and best’ use, which in this case is more of our own
fast-growing digital investment management platform.”
“Wafra has a successful history of partnering with preeminent
management teams to help scale industry-leading asset management
businesses. We are pleased to have played an important role in
accelerating DigitalBridge’s transformation to a pure-play digital
infrastructure investment firm,” said Fawaz Al-Mubaraki, Chief
Executive Officer of Wafra.
Adel Alderbas, Chief Investment Officer of Wafra, added,
“DigitalBridge is well positioned to continue its pioneering role
in the digital infrastructure industry, and we believe now is the
time to progress our partnership to the corporate level. We are
excited about the Company’s growth trajectory and look forward to
continuing to support DigitalBridge as an aligned shareholder and
trusted advisor.”
Upon completion of the transaction, Mr. Alderbas will serve as a
Senior Advisor to DigitalBridge. In addition to the transaction
consideration of $800 million, Wafra will have rights to an earnout
of up to $125 million, subject to certain future performance
thresholds, which may be paid up to 50% in stock at the Company’s
election. The $390 million of cash consideration, subject to
certain net cash and closing adjustments, will be funded by
cash-on-hand from the Company’s balance sheet. The transaction is
expected to close during the second quarter of 2022, subject to
regulatory clearance and other customary closing conditions.
A detailed Transaction Summary outlining the key terms,
anticipated financial implications, and strategic rationale for the
transaction has been posted to the Shareholders section of the
Company’s website and will be furnished as an exhibit to a Current
Report on Form 8-K with the U.S. Securities and Exchange
Commission.
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 today that its Board of Directors
has approved the transition to a conventional C-Corp structure and
the Company will not be treated as a Real Estate Investment Trust
(“REIT”) for tax purposes in 2022. Most importantly, the change is
not expected to result in material tax impacts given the Company’s
substantial legacy NOLs and Capital Loss Carryforwards (which are
summarized in the Transaction Summary, including a five-year
analysis of tax implications). Further, this change is expected to
provide the Company with significant additional strategic
flexibility going forward as it accelerates investment in new
DigitalBridge IM initiatives and evaluates opportunities to deploy
capital into an evolving digital infrastructure ecosystem without
REIT constraints. Moreover, DigitalBridge believes that a
traditional C-Corp structure is more consistent with its strategic
roadmap to create a “serial compounder of shareholder value”, with
the majority of shareholder returns expected to be generated
through capital appreciation and growth within the DigitalBridge
organization.
“We have always maintained a pragmatic approach to our legacy
REIT status, highlighting that we would maintain it to the extent
it served our strategy,” said Jacky Wu, Chief Financial Officer of
DigitalBridge. “The compelling transaction with Wafra announced
today underscores our determination that the additional strategic
flexibility afforded by a conventional C-Corp structure is positive
for the Company and our shareholders going forward. Importantly,
our strategy – focused on identifying the best investments in the
digital infrastructure landscape where we can create the most value
– remains unchanged.”
About Wafra
Wafra is a global alternative investment manager. Wafra manages
approximately $33 billion of assets across financial services, real
assets and real estate. To date, Wafra has formed 23 strategic
partnerships with both growth stage and mature alternative
investment management firms. By providing flexible and accretive
capital solutions and focusing on long-term partnerships, Wafra
aligns with, and invests in, high quality management teams.
Headquartered in New York, Wafra has additional offices in London,
Kuwait and Bermuda. For more information, please visit
www.wafra.com.
About DigitalBridge
DigitalBridge (NYSE: DBRG) is a leading global digital
infrastructure investment firm. With a heritage of over 25 years
investing in and operating businesses across the digital ecosystem
including cell towers, data centers, fiber, small cells, and edge
infrastructure, the DigitalBridge team manages a $45 billion
portfolio of digital infrastructure assets on behalf of its limited
partners and shareholders. Headquartered in Boca Raton,
DigitalBridge has key offices in New York, Los Angeles, London, and
Singapore. For more information, visit: www.digitalbridge.com.
Cautionary Statement regarding Forward-Looking Statements
This press release may contain forward-looking statements within
the meaning of the federal securities laws. Forward-looking
statements relate to expectations, beliefs, projections, future
plans and strategies, anticipated events or trends and similar
expressions concerning matters that are not historical facts. In
some cases, you can identify forward-looking statements by the use
of forward-looking terminology such as “may,” “will,” “should,”
“expects,” “intends,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” or “potential” or the negative of these
words and phrases or similar words or phrases which are predictions
of or indicate future events or trends and which do not relate
solely to historical matters. Forward-looking statements involve
known and unknown risks, uncertainties, assumptions and
contingencies, many of which are beyond our control, and may cause
actual results to differ significantly from those expressed in any
forward-looking statement. Factors that might cause such a
difference include, without limitation, whether the Company’s
acquisition of Wafra’s interest will be completed within the time
frame and on the terms anticipated or at all, whether the Company
will realize any of the anticipated benefits from the transaction,
whether the DigitalBridge IM business will continue to grow at the
rate anticipated, whether the Company will be able to utilize
existing tax attributes as contemplated and other risks and
uncertainties, including those detailed in DigitalBridge’s Annual
Report on Form 10-K for the year ended December 31, 2021, and its
other reports filed from time to time with the U.S. Securities and
Exchange Commission (“SEC”). All forward-looking statements reflect
DigitalBridge’s good faith beliefs, assumptions and expectations,
but they are not guarantees of future performance. DigitalBridge
cautions investors not to unduly rely on any forward-looking
statements. The forward-looking statements speak only as of the
date of this press release. DigitalBridge is under no duty to
update any of these forward-looking statements after the date of
this press release, nor to conform prior statements to actual
results or revised expectations, and DigitalBridge does not intend
to do so.
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version on businesswire.com: https://www.businesswire.com/news/home/20220418005235/en/
DigitalBridge Investors: Severin White Managing Director,
Head of Public Investor Relations (212) 547-2777
severin.white@digitalbridge.com
Media: Jon Keehner / Aura Reinhard Joele Frank, Wilkinson
Brimmer Katcher (212) 355-4449 DBRG-jf@joelefrank.com
Wafra Katrina Allen Edelman
(917) 640-2753 Katrina.Allen@edelman.com
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