A Spac ménage à trois gets messy for private equity
Dyal Capital’s three-way merger holds unforeseen implications for private equity groups
It’s complicated: private equity awaits its fate in the Dyal/Owl Rock deal
At first, the audacious bid to take Dyal Capital and Owl Rock public prompted confusion on Wall Street. Now, there is real anger — and some heavyweight companies are preparing for a battle royale.
In a complex deal, a shell company sponsored by HPS Investment Partners intends to merge with two of Wall Street biggest recent success stories.
One of them, Dyal, has in the past decade become the partner of choice for big-name private equity groups looking to sell stakes in their business; it has snapped up pieces of Silver Lake and Vista, at huge valuations.
The other, Owl Rock, is an up-and-coming direct lender — which puts it in competition with a number of companies that have sold stakes to Dyal.
Two of Owl Rock’s rivals think the fit is outrageous. Sixth Street Partners and Golub Capital have in the past week taken their claims of betrayal to court.
Both believe that the merged group, to be called Blue Owl, will be an arch-competitor of theirs — and worse, a competitor that will be privy to some of their most intimate secrets. And they argue that their contracts with Dyal give them the right to stop the Spac deal.
Naturally, Dyal, founded by former Lehman Brothers bankers Michael Rees and Sean Ward, disagrees. It will contest the lawsuits, which have been filed in state courts in Delaware and New York.
The deal valued Blue Owl at a juicy $12.5bn, putting it in the league of the likes of Ares Management and Carlyle Group. It’s also a sweet deal for Dyal’s owner, asset manager Neuberger Berman. Neuberger, also once a part of the Lehman empire, is to net more than $1bn in proceeds — while remaining a large holder of Blue Owl.
That payout depends, of course, on the deal closing. Now, litigation in two jurisdictions has muddled the path forward — and some of the most secretive and powerful financial groups in the world may soon be airing their dirty laundry in court.