B. Riley Financial Establishes Partnership with Oaktree
B. Riley Financial, Inc. (NASDAQ: RILY), a prominent financial services platform, has announced an exciting partnership with Oaktree Capital Management, L.P. This collaboration aims to enhance the operations of Great American Holdings, LLC, a newly formed organization focused on asset valuation and capital asset management.
Details of the Partnership
Before the official transaction closes, B. Riley Financial intends to conduct an internal restructuring. This process involves transferring various business interests, including its Appraisal and Valuation Services and Real Estate divisions, into Great American NewCo. The conglomerate, known as the 'Great American Group', will benefit from this internal realignment.
Transaction Overview and Financial Implications
At the completion of this partnership, B. Riley is set to receive approximately $203 million in cash, alongside Class B Preferred Units valued at about $183 million. Additionally, they will hold around 47% of common units within the new company. In contrast, Oaktree will acquire Class A Preferred Units also estimated at $203 million, along with 53% of Class A Common Units. This implies a total enterprise value of $386 million for Great American NewCo. The agreement has received the approval of B. Riley’s Board of Directors and is pending customary regulatory approvals.
B. Riley's Vision for the Future
The Chairman and Co-CEO of B. Riley, Bryant Riley, expressed enthusiasm about this strategic partnership, highlighting Oaktree's robust reputation in asset management. Riley believes that the complementary strengths of both organizations will enhance their ability to offer comprehensive financial products and services to a broader client base.
Capital Optimization and Growth
Riley articulated that this collaboration aligns with B. Riley's strategy to reduce debt and reinvest in their core financial services. By joining forces with Oaktree, the company anticipates not only decreasing financial liabilities but also enriching their capacity for growth and expansion in the market.
Insights from Oaktree Leadership
Oaktree's representatives are equally optimistic about the partnership. Nick Basso, Managing Director at Oaktree, stated that Great American presents an attractive investment opportunity, emphasizing the potential for growth in asset appraisal and real estate services. Thomas Casarella, another Managing Director at Oaktree, noted their excitement in bringing capital and expertise for enhancing Great American’s independent growth platform.
Strategic Advisors Behind the Deal
Several leading advisory firms supported this strategic transaction. Moelis & Company LLC acted as the exclusive financial advisor for B. Riley, while Sullivan & Cromwell LLP provided legal guidance to the company. Oaktree was advised by Wachtell, Lipton, Rosen & Katz in this significant financial undertaking.
About B. Riley Financial
B. Riley Financial is a multifaceted financial services firm providing customized solutions that address the operational and capital needs of its clients. The firm’s extensive range of services encompasses investment banking, financial consulting, appraisal, and liquidation services among others. Through its various subsidiaries, B. Riley continues to expand its offerings, leveraging its rich expertise to aid clients throughout their business lifecycle.
About Oaktree Capital Management
Oaktree Capital Management stands as a leader in global investment management, focusing on alternative investments with an impressive $193 billion in assets under management. With a workforce of over 1,200 spread across 23 cities, the firm prioritizes an opportunistic and risk-conscious approach to various investment sectors, including credit and real estate.
Frequently Asked Questions
What is the nature of the partnership between B. Riley and Oaktree?
The partnership focuses on establishing Great American Holdings, LLC, enhancing asset valuation and advisory services through a strategic collaboration.
What financial benefits does B. Riley expect from this transaction?
B. Riley anticipates around $203 million in cash and increased equity in the newly formed Great American NewCo, aiming for debt reduction and growth.
Who are the key advisors involved in this partnership?
Moelis & Company LLC and Sullivan & Cromwell LLP guided B. Riley, while Oaktree was supported by Wachtell, Lipton, Rosen & Katz.
How will Oaktree benefit from this investment?
Oaktree looks forward to enhancing its investment portfolio through a leading platform in asset disposition and appraisal, leveraging its operational expertise.
What does this partnership signify for the future of both companies?
This collaboration represents a strategic step towards growth and debt management, positioning both firms for enhanced market capabilities and competitive advantages.
