B. Riley Financial and Oaktree's Strategic Partnership
B. Riley Financial, Inc. (NASDAQ: RILY) has established a significant partnership with Oaktree Capital Management, marking a transformative moment for both firms. This collaboration centers around Great American Holdings, LLC, a newly formed entity that will benefit from each company's unique strengths.
Formation of Great American Holdings
As part of this strategic move, B. Riley is set to undergo an internal reorganization. The company plans to integrate its various appraisal, valuation, and advisory services into the newly formed Great American Holdings. This consolidation aims to streamline operations while enhancing service delivery.
Details of the Transaction
The agreement between B. Riley and Oaktree entails a diverse financial structure. Upon closing, B. Riley will receive approximately $203 million in cash and Class B Preferred Units that have an initial liquidation preference of about $183 million. Furthermore, B. Riley will hold around 47% of the total outstanding common units in Great American Holdings.
Oaktree's Involvement
Oaktree will invest significantly in this transaction, acquiring Class A Preferred Units alongside a majority holding of approximately 53% of the common units. This structured deal positions both firms for future growth with a joint enterprise value estimated at $386 million.
Comments from Leadership
Bryant Riley, Chairman and Co-CEO of B. Riley, expressed enthusiasm about the partnership, highlighting Oaktree’s impressive reputation within the investment management sector. Bryant stated, "This alliance will enhance our operational capabilities and allow us to serve our clients with even greater efficacy. Combining Oaktree's resources and our expertise positions us to accelerate growth and innovation in the financial services industry."
Vision for Future Growth
Riley noted that this transaction is pivotal in their strategy to reduce debt while simultaneously paving the way for innovative financial solutions that cater to their client base. The integration with Oaktree is a proactive step to enhance both firms' market presence.
Support from Oaktree Management
Nick Basso, a Managing Director at Oaktree, conveyed optimism about the investment, citing Great American Holdings as a compelling opportunity for growth. He stated, "We're committed to leveraging our extensive experience in the industry to support Great American's strategic objectives. Our focus is on fostering an independent growth platform that will thrive in the competitive market."
Collaboration for Client Success
Thomas Casarella, also a Managing Director at Oaktree, echoed these sentiments and expressed eagerness to collaborate with B. Riley’s talented leadership. He noted that by uniting resources and expertise, they would create impactful solutions that resonate well with clientsrly.
Advisory Support
B. Riley received financial guidance from Moelis & Company LLC while Sullivan & Cromwell LLP provided legal assistance. Meanwhile, Oaktree was supported by the legal expertise of Wachtell, Lipton, Rosen & Katz.
About B. Riley Financial
B. Riley Financial is a diversified financial services platform, dedicated to providing customized solutions addressing the unique needs of its clients. Their extensive expertise spans multiple sectors, offering a range of financial services, including investment banking, asset management, and financial consulting. The firm's commitment to creating value for its shareholders is demonstrated through its market-leading services.
About Oaktree
As a leading player in the realm of alternative investments, Oaktree manages around $193 billion in assets. The firm is recognized for its value-oriented investment strategies across areas like credit and private equity. With global operations employing over 1,200 professionals, Oaktree continues to exert a significant influence within the investment management landscape.
Frequently Asked Questions
What is the primary goal of the B. Riley and Oaktree partnership?
The primary goal is to leverage each company's strengths for enhanced service offerings and operational growth in the financial sector.
What are the expected benefits of the transaction?
The transaction is expected to reduce B. Riley's debt while allowing both firms to benefit from enhanced equity and growth prospects.
How will this partnership affect clients?
Clients can expect more comprehensive financial products and services as the collaboration aims to meet diverse needs effectively.
What services does B. Riley Financial provide?
B. Riley Financial offers services in areas such as investment banking, asset management, financial consulting, and valuation services.
How does Oaktree contribute to the partnership?
Oaktree brings its expertise in alternative investments and capital provision, alongside its expansive operational resources, to bolster the partnership's growth strategy.
