Transaction and Partnership Highlights
- The transaction brings together GWG Holdings (GWGH), a leading innovator in the life insurance industry, and The Beneficient Company Group, L.P. (BEN), designed to be one of the most innovative service and liquidity providers in the rapidly expanding alternative asset industry
- The strategic partnership to provide GWGH with a significant increase in assets, common shareholder equity and a new source of earnings and cash flow
- GWGH to continue executing on announced strategies while also leveraging its existing independent broker-dealer and registered investment advisor (RIA) network as a potential origination platform for BEN’s innovative alternative asset liquidity products
- GWGH provides BEN and institutional investors exposure to the life insurance asset class in which GWGH is an acknowledged leader
- An affiliated unitholder of BEN to invest $150 million to acquire GWGH common stock at $10.00 per share and 5-year GWGH L-Bonds
- Total consideration for the BEN interests acquired by GWGH to be $150 million in cash and up to $650 million in GWGH common stock at $10.00 per share and five-year GWGH L-Bonds
GWG Holdings, Inc. (Nasdaq: GWGH), the parent company of GWG Life and Life Epigenetics, a financial services company committed to transforming the life insurance industry through disruptive and innovative products and services, today announced a strategic relationship with The Beneficient Company Group, L.P. (BEN) that will be effected through a transformative transaction that is expected to significantly increase GWGH’s common shareholder equity, diversify its balance sheet, income statement and cash flow sources while creating opportunities to leverage existing infrastructure and capabilities.
BEN is the first financial services platform designed to provide a comprehensive suite of innovative lending and liquidity products offered to meet the rapidly growing liquidity demand from the nearly one million underserved mid-to-high net worth (MHNW) individual investors and small-to-medium institutional owners of alternative assets. BEN has also developed a complementary line of alternative asset fund administration and insurance services coupled with proprietary disruptive and scalable financial technologies.
As part of the strategic relationship, GWGH will acquire 82% of the outstanding BEN MLP units from existing unitholders of BEN. BEN will have in excess of $800 million of tangible financial assets pro forma for the transaction. GWGH will also enter into a $400 million, four-year commercial loan with BEN to enable BEN to continue building out its suite of liquidity products.
“We are pleased to announce a strategic relationship with one of the most innovative companies in the alternative asset industry,” said Jon Sabes, GWGH Chief Executive Officer. “BEN is partnering with GWGH because they’ve identified the life insurance asset class as a key enhancement to their diversified endowment portfolio of high-quality alternative assets for which they provide loans and liquidity. And while GWGH will continue to execute our announced strategies to our utmost capacity, we also look forward to rolling out BEN’s innovative alternative asset liquidity products to independent broker-dealers and RIAs once BEN obtains its pending regulatory approvals.”
“This transaction stands to potentially double our assets to over $1.6 billion and quadruple our total equity to over $500 million,” said William Acheson, GWGH Chief Financial Officer. “This is a transformational vote of confidence in GWGH, giving us both a scaled balance sheet and an additional source of current earnings which complements our large and growing life insurance portfolio. Additionally, we believe we will achieve greater access to the capital markets, creating opportunities to further optimize our capital structure and lower our cost of capital which is an important driver of shareholder value.”
“GWG Holdings is the perfect partner for us as we execute on our business plan and expand our product offerings,” said Brad K. Heppner, Chief Executive Officer and Founder of BEN. “We have been committed to adding the life insurance asset class to our business plan and our mix of alternative asset classes that we administer and lend against. GWGH’s expertise in the life insurance secondary market, as well as management’s commitment to growth and innovation, blend perfectly into the emerging opportunity to provide liquidity and administrative services to the alternative asset investors we serve.”
GWGH provides BEN and institutional investors exposure to the life insurance asset class in which GWGH is an acknowledged leader. With over a decade of experience, GWGH has experienced 28 percent growth, year-over-year, in its portfolio of life insurance policies, becoming one of the largest buyers of life insurance policies in the secondary market in 2017. In addition, GWGH launched Life Epigenetics, a wholly owned subsidiary that is commercializing innovative epigenetic technology designed to revolutionize the underwriting, pricing and sale of life insurance for the global insurance industry.
Credit Suisse Securities (USA) LLC is acting as lead financial advisor and placement agent to BEN.
Assuming the maximum size of $800 million, the transaction will be financed from (1) the issuance of $400 million of GWGH common stock at $10.00 per share, (2) the issuance of $400 million in five-year GWGH L-Bonds, and (3) $150 million in cash from an affiliated unitholder of BEN which will purchase a portion of the total common stock and L Bonds issued in conjunction with the transaction, at the election of GWGH.
The GWGH-BEN transaction, which is expected to close on or before April 30, 2018, is subject to a number of closing conditions, including regulatory and GWGH shareholder approvals, that are described in a Form 8-K filed with the Securities and Exchange Commission (SEC) today.