Avalon Acquisition Inc. (“Avalon”) (NASDAQ: AVAC), a publicly
traded special purpose acquisition company, today announced a
definitive merger agreement with The Beneficient Company Group,
L.P. (“Ben” or “the Company”), a technology-enabled platform
providing liquidity, data, custody and trust services to holders of
alternative assets, that will result in the Company becoming
publicly listed. Upon the closing of the transaction, the combined
company will be named Beneficient and is expected to be listed on
Nasdaq.
Beneficient’s end-to-end digital platform
provides financing for liquidity and related services to a growing
number of investors who are seeking liquidity for their alternative
assets through regulated fiduciaries. The Company’s
cybersecure-certified AltAccess portal is the first widely
available venue for exchanging alternative assets from a balance
sheet provider acting as a regulated fiduciary, is subject to
regulatory oversight and is powered by over 800,000 lines of
proprietary code.
The Company’s liquidity exchange offering
leverages Beneficient’s proprietary technology and patent-pending
algorithmic systems to provide alternative asset investors a quote
for their investments and liquidity in 30 days or fewer. This
compares to traditional processes that may take four to 12 months
to execute and offer lesser price discovery at the outset of the
process for the alternative asset holder. Upon closing, the
combined entity would have access to the capital markets to offer
more liquidity options and better serve investors in a historically
costly and opaque market.
Brad Heppner, Founder and Chief Executive
Officer, of Beneficient, commented:
“We began Beneficient based on the simple, yet
ambitious belief that individual investors and smaller institutions
should be empowered with the same opportunities as large
institutional investors when it came to their alternative
investments. We are working to democratize the industry starting
with a simple, secure, rapid and cost-effective solution to what we
saw as the most foundational and pressing need: liquidity. Today’s
announcement with Avalon validates our belief in Ben’s value and
industry-redefining business plan and is a testament to the
dedication of everyone at Ben who has made this possible.”
Beneficient has built a robust compliance and
tech infrastructure. The Company has received a Technology Enabled
Fiduciary Financial Institution charter from the Kansas Office of
the State Bank Commissioner to serve as a regulated fiduciary in
providing liquidity, custodial and administrative services. The
receipt of this charter reflects Beneficient’s commitment to
operating with the highest standards of trust and integrity in
providing long-term fiduciary services, liquidity solutions, and
other services to customers in a regulated environment.
To date, Beneficient has financed transactions
that delivered liquidity on approximately $1.1 billion in net asset
value of alternative investment holdings across sectors,
geographies and investment types, including endowments, private
equity and buyout funds, venture capital funds, feeder funds,
fund-of-funds, private Real Estate Investment Trusts and non-traded
Business Development Companies, including $383 million in the
fourth quarter of 2021 and first quarter of 2022. Beneficient’s
primary business units, Ben Liquidity and Ben Custody & Data,
were profitable based on segment operating income in 2021, although
the consolidated company had an operating loss in 2021.
Notably, Beneficient has a growing network of
wealth management partners, including broker dealers, RIAs and
private banking platforms, and general partners. These partners can
look to Ben as a “Preferred Liquidity Provider” that can deliver
affordable, consistent and reliable services. The Company has also
launched its own broker-dealer, Beneficient Securities Company, to
support its plan and strategic priorities.
Craig Cognetti, Chief Executive Officer of
Avalon, added:
“Avalon’s target criteria included disruptive
technology, innovative business strategy, a growing business, and a
large total addressable market. Beneficient fulfills all of these
criteria. The total addressable market for liquidity and ancillary
services for alternative asset investors is large and growing
considerably. Existing solutions for individuals and smaller
institutions are cost prohibitive and time consuming, leaving their
needs largely unmet. Beneficient’s innovative solutions tap into
this unmet demand and represent a disruptive force transforming the
way mid-to high net worth investors and small-to medium sized
institutions – and really all investors – think about their
alternative investments. Beneficient has been growing responsibly
and improving outcomes for investors, and we look forward to
helping Brad and the team execute on their strategic
ambitions.”
Overview of Transaction
The combination implies an enterprise valuation
of $3.5 billion, including approximately $200 million in gross
proceeds from Avalon’s cash in trust – assuming no redemptions.
Upon the closing of the transaction, and
assuming no public stockholders redeem their shares, existing
Beneficient shareholders are expected to continue owning 88% of the
combined company, with public stockholders expected to own 10%, and
Avalon sponsors expected to own 2%.
The Boards of Directors of both Beneficient and
Avalon have unanimously approved the proposed business combination,
which is expected to be completed in the first half of 2023 subject
to stockholder approval and other customary closing conditions.
Overview of Beneficient’s Management
Team
Mr. Heppner,
who is founder, a major shareholder and Chief Executive Officer,
leads the Company. He previously founded and/or acquired 10
alternative asset operating companies, including The Crossroads
Group and Capital Analytics, after working in alternatives at
institutions such as Bain & Co. and The MacArthur Foundation
over his 30-year career. Additional executives include:
- James Silk, Executive Vice
President & Chief Legal Officer: Mr. Silk has more
than 20 years of investment management and financial services
experience, previously serving as Partner at Willkie Farr &
Gallagher LLP, where he counseled leading asset management firms on
a wide variety of legal, compliance and regulatory issues.
- Derek Fletcher, President
& Chief Fiduciary Officer Wealth Strategies Director:
Mr. Fletcher has more than 25 years of wealth management and
fiduciary advisory experience, previously serving as a Managing
Director at Bank of America Private Wealth Management and Partner
at Winstead PC.
- Jeff Welday, Global Head of
Originations & Distribution: Mr. Welday, who runs Ben
Capital Markets and is President of Beneficient Securities Company,
has more than 25 years of investment management industry
experience, previously holding roles at institutions such as
Invesco, Morgan Stanley and JP Morgan Chase.
- Scott Wilson, Chief
Underwriting Officer: Mr. Wilson, who leads Ben Liquidity,
has 20 years of experience, primarily in the alternative asset
space, and also brings a strategy background from his tenure at
McKinsey & Company.
- Dr. Samuel Hikspoors,
Credit Risk Officer & Managing Director: Dr.
Hikspoors, who leads Ben Data Services, has more than 15 years of
experience in alternative investments, risk and quant strategies,
and previously held roles at Sage Advisory and Invesco after
earning a PhD & MSc from the University of Toronto.
Overview of Beneficient’s Board of
Directors
In addition to Mr. Heppner, who currently serves
as Chairman, and Mr. Silk and Mr. Fletcher, Beneficient’s Board of
Directors includes investment management luminaries, two former
U.S. Federal Reserve Bank presidents, and a former Big Four audit
partner:
- Thomas
Hicks is an alternatives and private equity industry
pioneer with decades of investment experience, who currently serves
as Chairman of Hicks Holdings, LLC and previously served on the
Board of Directors of Carpenter Technology Corporation.
- Richard
Fisher is a banking executive, corporate governance expert
and former President and Chief Executive Officer of the Federal
Reserve Bank of Dallas. Mr. Fisher currently serves as President
and Chief Executive Officer of RWF Financial, Inc., a Senior
Adviser to Barclays PLC, a director on the Board of Directors of
Tenet Healthcare (NYSE: THC) and Warner Brothers Discovery (NASDAQ:
WBD) and previously served as a director on the Board of Directors
of AT&T and PepsiCo.
- Bruce
Schnitzer is a specialty financial services executive with
more than 30 years of experience, who currently serves as Chairman
of private equity sponsor Wand Partners and previously served as
President and Chief Executive Officer of Marsh, Inc. and Head of
M&A for J.P. Morgan.
- Peter
Cangany is an audit executive with more than 30 years of
experience working with diversified financial services
organizations, who previously served as a Partner at Ernst &
Young where he advised insurance and reinsurance clients and led
audit services for a range of global companies, including Fortune
100 financial services organizations and domestic insurers.
- Emily
Bowersock Hill is a financial services executive with more
than 20 years of experience, who founded and serves as Chief
Executive Officer of Bowersock Capital Partners, a leading
financial advisory firm. Ms. Bowersock Hill previously served as
Executive Director, Senior Portfolio Manager and Family Wealth
Director at Morgan Stanley and began her career as a consultant at
McKinsey & Company.
- Dennis
Lockhart is a financial services executive, corporate
governance expert and former President and Chief Executive Officer
of the Federal Reserve Bank of Atlanta. Early in his career, Mr.
Lockhart worked at Citigroup and Zephyr Management, served as a
director on several public company boards and is currently serving
on the Board of Directors of Invesco Mortgage Capital (NYSE:
IVR).
The newly combined entity’s Board of Directors
may include new independent individuals.
Corporate Social Responsibility and
Community Investment Overview
Beneficient is a mission-driven company that is
focused on helping foster economic development in its local
communities. Beneficient’s transactions have already resulted in
contributions of cash and assets with a value of more than $15
million in the aggregate to the Kansas Department of Commerce, the
City of Hesston, the Kansas Economic Growth Trust and the
Beneficient Heartland Foundation, each of which is dedicated to
rural economic development in Kansas. As a mission-driven company,
Beneficent continually seeks opportunities to give back to the
local communities in which it operates.
Avalon Webcast and Conference Call
Information
An Avalon investor webcast and conference call
discussing the transaction can be accessed on September 21, 2022 at
8:00 am ET by visiting www.avalonspac.com.
Participant Dial-In Numbers:
- United States
Toll-Free: +1-877-407-9039
- United States
Toll/International: +1-201-689-8470
- Conference ID:
13732807
A transcript of the call and a presentation will
also be filed by Avalon with the SEC.
Advisors
Lazard served as sole financial advisor to
Beneficient and Haynes and Boone, LLP acted as legal advisor.
Houlihan Capital provided a fairness opinion to Avalon Acquisition
Inc. and Venable LLP acted as legal advisor.
About Beneficient
The Beneficient Company Group, L.P. (Ben)
provides a unique suite of simple, rapid, and cost-effective
liquidity solutions and other financial and fiduciary services for
owners of alternative assets. Ben's liquidity solutions are
available for most types of professionally managed alternative
asset investments and can be customized to suit individual
circumstances. Serving as a principal by using its own balance
sheet, Ben operates as a permanent financial institution that helps
to remove many of the traditional barriers to liquidity faced by
mid-to-high-net-worth individuals and small-to-mid-sized
institutions. For more information, visit www.trustben.com.
About Avalon Acquisition
Inc.
Avalon Acquisition Inc. is a blank check company
whose business purpose is to effect a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or
similar business combination with one or more businesses. Although
the Company may pursue targets in any industry, it intends to focus
its search on companies in the financial services and financial
technology industries. The Company is led by Executive Chairman Don
Putnam and Chief Executive Officer Craig Cognetti.
Additional Information and Where to Find
It
In connection with the proposed transaction,
Beneficient will file with the Securities and Exchange Commission
(the “SEC”) a registration statement on Form S-4 that will include
a proxy statement of Avalon and a prospectus of Beneficient, as
well as other relevant documents concerning the proposed
transaction. INVESTORS, SECURITY HOLDERS AND OTHER INTERESTED
PERSONS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS
WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. Avalon stockholders will
be able to obtain a free copy of the proxy statement/prospectus, as
well as other filings containing information about Beneficient and
Avalon, without charge, at the SEC’s website
(http://www.sec.gov). Copies of the proxy
statement/prospectus can also be obtained, without charge, by
directing a request to Avalon Acquisition Inc., 2 Embarcadero
Center, 8th Floor, San Francisco, CA 94111.
Participants in
Solicitation
Avalon and its directors and executive officers
may be deemed participants in the solicitation of proxies from
Avalon’s stockholders with respect to the proposed business
combination. A list of the names of those directors and executive
officers and a description of their interests in Avalon is
contained in Avalon’s final prospectus related to its initial
public offering dated October 5, 2021, which was filed with the SEC
and is available free of charge at the SEC’s website at
www.sec.gov. Additional information regarding the interests of such
participants will be contained in the proxy statement/prospectus
for the proposed business combination when available.
The Company and its directors and executive
officers may also be deemed to be participants in the solicitation
of proxies from the stockholders of Avalon in connection with the
proposed business combination. A list of the names of such
directors and executive officers and information regarding their
interests in the proposed business combination will be included in
the proxy statement/prospectus for the proposed business
combination that will be filed on Form S-4 when available.
No Offer or Solicitation
This communication does not constitute (i) a
solicitation of a proxy, consent or authorization with respect to
any securities or in respect of the business combination or (ii) an
offer to sell, a solicitation of an offer to buy, or a
recommendation to purchase, any securities of Beneficient, Avalon,
the combined company or any of their respective affiliates. No
offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended, or an exemption therefrom, nor shall any
sale of securities in any states or jurisdictions in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction
be affected. No securities commission or securities regulatory
authority in the United States or any other jurisdiction has in any
way passed upon the merits of the business combination or the
accuracy or adequacy of this communication.
Forward-Looking Statements
Certain statements included in this
communication that are not historical facts are forward-looking
statements. Forward-looking statements generally are accompanied by
words such as “believe,” “may,” “will,” “estimate,” “continue,”
“anticipate,” “intend,” “expect,” “should,” “would,” “plan,”
“predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and
similar expressions that predict or indicate future events or
trends or that are not statements of historical matters. These
forward-looking statements include, but are not limited to, certain
plans, expectations, goals, projections, and statements about the
benefits of the proposed transaction, the plans, objections,
expectations, and intentions of Beneficient and Avalon, the
expected timing of completion of the transaction, and other
statements that are not historical facts. These statements are
based on information available to Beneficient and Avalon as of the
date hereof and neither Beneficient nor Avalon is under any duty to
update any of the forward-looking statements after the date of this
communication to conform these statements to actual results. These
statements are based on various assumptions, whether or not
identified in this communication, and on the current expectations
of the respective management of Beneficient and Avalon as of the
date hereof and are not predictions of actual performance. These
forward-looking statements are provided for illustrative purposes
only and are not intended to serve as and should not be relied on
by an investor or others as, a guarantee, an assurance, a
prediction, or a definitive statement of fact or probability.
Actual events and circumstances are difficult or impossible to
predict and will differ from assumptions. Many actual events and
circumstances are beyond the control of Beneficient and Avalon.
These forward-looking statements are subject to a number of risks
and uncertainties, including, but not limited to, changes in
domestic and foreign business, market, financial, political, and
legal conditions; the inability of the parties to successfully or
timely consummate the proposed transaction, including the risk that
any regulatory approvals or the SEC’s declaration of the
effectiveness of our prospectus/proxy statement are not obtained,
are delayed or are subject to unanticipated conditions that could
adversely affect the combined company or the expected benefits of
the proposed transaction or that the approval of the requisite
equity holders of Avalon is not obtained; failure to realize the
anticipated benefits of the proposed transaction; risks related to
the rollout of Beneficient’s business and the timing of expected
business milestones; the effects of competition on Beneficient’s
business; the amount of redemption requests made by Avalon’s
stockholders; the ability of Avalon or Beneficient to issue equity
or equity-linked securities or obtain debt financing in connection
with the proposed transaction or in the future; and those factors
discussed in Avalon’s final prospectus dated October 5, 2021 under
the heading “Risk Factors,” and other documents Avalon has filed,
or will file, with the SEC. If any of these risks materialize or
our assumptions prove incorrect, actual results could differ
materially from the results implied by these forward-looking
statements. There may be additional risks that neither Avalon nor
Beneficient presently know, or that Avalon or Beneficient currently
believe are immaterial, that could also cause actual results to
differ from those contained in the forward-looking statements. In
addition, the forward-looking statements reflect Avalon’s and
Beneficient’s expectations, plans, or forecasts of future events
and views as of the date of this communication. Avalon and
Beneficient anticipate that subsequent events and developments will
cause Avalon’s and Beneficient’s assessments to change. However,
while Avalon and Beneficient may elect to update these
forward-looking statements at some point in the future, Avalon and
Beneficient specifically disclaim any obligation to do so. These
forward-looking statements should not be relied upon as a
representation of Avalon’s and Beneficient’s assessments as of any
date subsequent to the date of this communication. Accordingly,
undue reliance should not be placed upon the forward-looking
statements.
Contacts
For Investors:
Beneficient Investor Relationsinvestors@beneficient.com
Avalon Acquisition Inc.investors@avalonspac.com
For Media:
Longacre Square PartnersDan Zacchei / Greg Marose
beneficient@longacresquare.com
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