CEFC China Energy Co. Ltd. has agreed to buy a 19.9% stake in Cowen Group Inc. and provide $175 million in debt financing to the broker.
CEFC China plans to purchase the stake at a price of $18 per share, for an aggregate purchase price of approximately $100 million. The offer price would be an estimated 29.5% premium to Cowen's closing share price on March 28, which was $13.90.
The debt financing would be in the form of a senior unsecured loan with a six-year maturity.
The investors would have the right to appoint three directors to Cowen's board, which would expand to 11 members.
Cowen plans to use proceeds from the equity investment to repay its 8.25% senior notes due 2021 and to fund growth opportunities at the company and at its subsidiaries. Proceeds from the debt financing would be used for general corporate purposes, including strategic transactions, acquisitions and investments in Cowen's business.
The equity investment and debt financing are expected to close concurrently by the end of the third quarter subject to regulatory approvals.
Starr Strategic Partners LLC served as financial adviser for Cowen, and Willkie Farr & Gallagher LLP was legal counsel.
Lazard served as financial adviser for CEFC China. Skadden Arps Slate Meagher & Flom LLP acted as U.S. legal counsel, while King & Wood Mallesons served as China legal advisers.
CEFC China Energy is a private Chinese company with core businesses in energy and financial services.