TPG Sixth Street Buys Stake in Halcyon, Dyal Adds to Holding

(Bloomberg) -- TPG Sixth Street Partners, the $27 billion credit firm, is buying a stake in Halcyon Capital Management, an investment manager finalizing its long-term succession plan.

TSSP, led by managing partner Alan Waxman and part of TPG, is acquiring a passive equity position in Halcyon, the companies said Wednesday in a statement. Neuberger Berman Group’s Dyal Capital Partners is also adding to a minority investment first made in 2012.

“A lot of other transactions in our space, whether it’s to go public or stay private, they involve some form of taking chips off the table or cashing out,” Jason Dillow, who’s taking over as Halcyon’s chief executive officer, said in a Bloomberg Television interview. “That’s exactly the opposite of what we’re doing here -- no partner is selling in the transaction.”

TSSP and Dyal will own between 20 percent and 25 percent of the $10 billion New York-based firm, said a person with knowledge of the matter who asked not to be named because the information is private. Concurrent with the transaction, Halcyon will be renamed Bardin Hill Investment Partners.

Dillow’s appointment completes a succession process started in 2016, when he was named chief investment officer, a role he still holds. Current CEO John Bader, 56, is retiring after almost 30 years at the firm. Dillow, 41, came to Halcyon in 2005 from Goldman Sachs Group Inc., where he worked in the special-situations investing group with Waxman, a co-founder of TSSP in 2009.

Succession Planning

Several investment managers have been planning for succession, a decision that hasn’t always come easily after decades in the business. At Och-Ziff Capital Management Group LLC, former banker Robert Shafir was chosen early this year to succeed Dan Och over co-CIO Jimmy Levin. Ray Dalio started plotting his transition at Bridgewater Associates eight years ago in a process that’s included management shuffling.

The TSSP-Dyal deal will help position Bardin Hill for the future, Dillow said in an interview. The additional liquidity offered by such transactions often helps managers looking to invest in new businesses or increase commitments to their funds.

“The reality is our investors have a long-term horizon, and that’s the type of capital we want to raise and how we want to invest,” he said. “We’re not under the same pressures as those folks trying to outperform the S&P in the short term.”

Dillow and some of Halcyon’s other managing principals and a philanthropic foundation started by founder Alan Slifka are also purchasing equity in the firm, according to the statement. All the equity being sold is newly issued. Terms weren’t disclosed.

Halcyon, which was founded in 1981 and focuses on credit and event-driven investments, has about $7 billion in collateralized-loan obligations and $3 billion in hedge fund and multistrategy assets.

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