It has been a good day for Trump advisor Anthony Scaramucci.
First, he was named by Bloomberg as this year’s surprise Davos star (recall that he is the only member of the Trump team participating unofficially at the Swiss boondoggle. “I brought a food taster,” Scaramucci joked in an interview on Bloomberg Television when asked about his solo mission). As a reminder, Scaramucci was recently named an assistant to the president and further told Bloomberg Television Tuesday that he will serve as a liaison between the White House and the business community, and work with local, state and foreign governments and trade associations.
Which brings us to the second reason why Anthony is smiling.
Today, as part of his shedding of potential conflict of interest, Scaramucci sold a majority stake in his SkyBridge Capital fund of funds, which has had prominent cameos in such movies as Wall Street 2, to HNA Capital U.S., which is controlled by Chinese billionaire Chen Feng, and RON Transatlantic EG. While terms of the deal were not disclosed, the deal, which includes the SkyBridge Alternatives Conference, or SALT, is said to be valued at about $200 million according to Bloomberg, and could increase to about $230 million if certain conditions are met. SkyBridge’s senior management and investment teams will remain intact while Scaramucci will step down.
And since Scaramucci owns about 45% of SkyBridge, he is about to pocket $100 million. He will no longer be affiliated with the firm or SALT, according to the transaction press release. Australian investment firm Challenger Ltd. also owns a stake, according to a filing, as does SkyBridge’s Chief Investment Officer Raymond Nolte.
“SkyBridge and SALT are in great hands and will continue to thrive,” Scaramucci said in a statement.
Scaramucci, who started his fund-of-hedge funds firm in 2005, made the deal as the industry bleeds assets and he prepares to work for President-elect Donald Trump. HNA Capital is the New York-based investment arm of Chinese conglomerate HNA Group, which has been on an acquisition spree for U.S. assets under Chen’s leadership. RON Transatlantic is a holding company with interests in financial services, logistics, energy and brewing, according to the statement.
As of last January, SkyBridge managed $9.2 billion in assets. As a fund of funds, SkyBridge has handed out client money to hedge funds including Marathon
Asset Management and York. Confirming that today’s deal was a major victory for the “Mooch” is that firms like SkyBridge have
largely lost their luster since the global financial crisis as investors
bypassed them to invest directly in hedge funds, assuming they invest in hedge funds: 2016 was the year of greatest outflows from the 2 and 20 community since the financial crisis. The fund-of-funds
industry manages about $636 billion in assets, down from its 2007 peak
of $799 billion, according to Hedge Fund Research Inc. They returned
about 0.48 percent last year.
Meanwhile SALT, a glitzy hedge fund affair, often compared to Davos itself for its draw of about 2,000 hedge-fund industry attendees each year, will be spun out as a standalone entity. SALT will be owned by Victor Oviedo, head of business development at SkyBridge, and Kelly O’Connor, a director of business development, according to another person briefed on the matter.
So who are the lucky buyers? This is where questions are likely to emerge.
When looking at RON Transatlantic, a holding company with interests in financial services, logistics, energy and brewing, the most interesting thing about this particular group is that Obama’s “body man”, Reggie Love works there as a Partner and VP:
It was not immediately clear why Reggie Love’s firm would boost its stake in Skybridge. As Bloomberg adds, a RON Transatlantic offshore entity already owns between 5 and 10% of SkyBridge.
As for HNA Group, it is among the most active players in what’s shaping up to be a record year for overseas acquisitions by Chinese companies. HNA’s $30 billion in investments announced and completed last year included multi-billion-dollar deals for Hilton Worldwide Holdings Inc., CIT Group Inc.’s aircraft leasing business and Ingram Micro Inc. Now it will own a fund of funds. HNA owner Chen, 63, who two decades ago used to push refreshment trolleys up and down the aisle of the lone Boeing 737 that comprised his startup airline, the SkyBridge acquisition is part of his ambition to make HNA one of the world’s top 100 companies by the end of this decade. In 1995, Chen flew to New York and persuaded George Soros to invest $25 million in his fledgling Hainan Airlines Co. That at least is the stated reason; the less palatable one is simply laundering of hot money through foreign M&A, a practice the PBOC warned it would crack down on in 2017.
It was also not clear as of this writing whether Scaramucci will be exempt from paying capital gains tax on the sale, considering he is joining the Trump administration after the deal.
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