Burford Capital Ltd. has agreed to acquire GKC Holdings LLC, the parent of Gerchen Keller Capital LLC, for $160 million in a combination of cash, shares and loan notes.
Burford will pay $93.8 million in cash on hand, $43.8 million in three-year loan notes and $22.5 million in new Burford ordinary shares for the transaction. The company will also pay another $15 million in performance-based share consideration if GKC's existing funds contribute more than $100 million in performance fee income to Burford.
Burford said the acquisition will be immediately accretive to its earnings per share.
GKC's team will join Burford and its principals will take senior roles in the combined business. GKC CEO Adam Gerchen will serve as president of Burford, and Ashley Keller and Travis Lenkner, managing directors at GKC, will hold the same positions at Burford.
Burford is a global finance firm focused on law that provides litigation finance and risk management, corporate intelligence and judgment enforcement and other law firm financing activities.
The combined company will operate under the Burford brand after closing. The combined company will have more than $1.2 billion in investment assets and commitments. Burford said the combination of two largest litigation finance firms will lead to benefits of scale and expanded geographic coverage that will lead to increased capital deployment for both public and private investors. The acquisition will provide revenue diversification to Burford Capital with the addition of investment management fees that will increase visibility on future income and reduce earnings volatility, Burford Capital said in a statement.
The transaction is expected to close on or about Dec. 15.
Morgan Stanley and KielStrand Capital LLC served as financial advisers to Burford. Jefferies International Ltd. and Keefe Bruyette & Woods Inc. acted as financial advisers for GKC. Freshfields Bruckhaus Deringer LLP served as legal adviser to Burford, and Katten Muchin Rosenman LLP provided legal advice to GKC.