Chidem Kurdas
Solar Capital’s backers – well-known names in the hedge fund industry – have waited for years. Will they exit in the coming months or stay in a holding pattern?
Solar is a publicly traded debt investment vehicle run by Michael Gross, a founder and former executive of private equity firm Apollo. Magnetar Financial, a hedge fund business founded by Alec Litowitz, former equity strategy chief at Citadel Group, is Solar’s largest single stockholder. Magnetar owns 24% of common stock.
The second largest owner is fund of funds manager Silver Creek Capital with about 8%. Hedge fund Baupost Group, value investor Seth Klarman’s shop, owns 6%.
Magnetar and the others acquired Solar shares before the initial public offering in February. Those shares were subject to a lock-up agreement, but the lock-up periods are expiring, starting this month. With the stock market volatile, plans to sell the holdings appear to be uncertain.
Another former Citadel star, David Snyderman, is a principal at Magnetar. Mr. Snyderman headed credit trading at Citadel, after proving himself at the convertible bond desk—Citadel’s original specialty. With Magnetar, Messrs. Litowitz and Snyderman got into collateralized debt obligations and ended up in trouble in 2008. They reportedly had $9 billion in assets at that time.
Solar acquired some portfolio investments from Magnetar and has Magnetar managers on its investment team. Mr. Gross himself was a partner in Magnetar. As former chief of Apollo Investment Corp., a publicly traded extension of the private equity firm, he’s had experience with public offerings of alternative investment businesses.
When the big shareholders sell is going to be interesting. Collectively they have a lot of market experience.
Tags: Alec Litowitz, Apollo, Baupost Group, David Snyderman, Magnetar, Michael Gross, Silver Creek Capital
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