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Tetragon Financial Offloads Minority Stake in Equitix Amid Hopes for Growth

Strategic Insights

— 2 min read

Tetragon Financial, an asset management platform led by Reade Griffith and Paddy Dear, has sold a 14.6% minority stake in its largest holding, Equitix, to Hunter Point Capital. The deal has been in the making for over a year, with reports emerging in October 2022 that Tetragon was planning to offload its position. Despite the sale falling short of full disposal hopes, the news has boosted shares in Tetragon, which have risen 5.4% since the announcement. The infrastructure investment firm, Equitix, has been valued at £1.3 billion (approximately $1.8 billion) in the transaction.

Key Takeaways:

  • The minority stake sale has provided a significant uplift to Tetragon's net asset value (NAV), with Jefferies analyst Matthew Hose estimating a 14% uplift to TFG's NAV, becoming 12% after the impact of the performance fee.
  • Tetragon will receive approximately $225m in proceeds from the sale, with the potential to pay down the $300m-drawn revolving credit facility.
  • JPMorgan Cazenove estimates there could be an 8.5% total uplift to NAV after performance fees, with shares potentially trading on a headline discount of 59% assuming the remaining Equitix stake is written up in line with the deal.
  • Equitix has grown its assets under management from £1.3bn to £11.7bn since Tetragon's investment in 2014, with a presence in social infrastructure, transport, renewable power, utility networks, and data infrastructure assets.
  • The deal allows Tetragon to "realise some of the value created in the business, while remaining invested with a trusted partner" according to Stephen Prince, chief executive of TFG Asset Management.
  • Hunter Point Capital aims to enhance Equitix's continued innovation and development, with expertise and resources to support the firm's growth.

Statistics:

  • £1.3 billion: the valuation of Equitix in the transaction.
  • $1.8 billion: the approximate value of the transaction in US dollars.
  • 14.6%: the percentage of Equitix stake being sold to Hunter Point Capital.
  • 81.5%: the majority position held by TFG Asset Management in Equitix.
  • $225m: the estimated proceeds received by Tetragon from the sale.
  • £11.7bn: the total assets under management by Equitix since Tetragon's investment in 2014.
  • £1.3bn: the assets under management by Equitix when Tetragon acquired the stake in 2014.
  • 70%: the abnormally large discount of TFG's shares in October 2022.
  • 59%: the current discount of TFG's shares.
  • 2014: the year Tetragon acquired the stake in Equitix from Cabot Square Capital.
  • 2027: the planned exit year from real estate investor BGO.

Sources:

  • Association of Investment Companies press release
  • Tetragon Financial factsheet (as of April 2023)
  • Jefferies analyst Matthew Hose's statement
  • JPMorgan Cazenove analyst Christopher Brown's statement
  • Stephen Prince, chief executive of TFG Asset Management's statement
  • Hunter Point Capital's statement

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