Chicago Atlantic Enters into Joint Venture with Silver Spike
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The formation of the joint venture between Chicago Atlantic and Silver Spike Capital represents a strategic business move that has the potential to reshape the investment management landscape within their respective sectors. By combining resources and expertise, the new entity may achieve economies of scale, diversify its asset portfolio and enhance its competitive positioning. The integration of the two firms' investment management businesses could lead to operational synergies, thereby potentially increasing profitability and shareholder value.
From a financial perspective, the deal's accretive nature suggests it is expected to contribute positively to earnings per share following the transaction. This could result in upward revisions of future earnings forecasts and potentially lead to a re-rating of the stock if the market perceives the joint venture as value-enhancing. Investors will likely monitor the execution of the integration process and any changes in financial metrics post-transaction, such as return on equity, profit margins and earnings growth.
Market dynamics in the investment management industry often revolve around the ability to source and manage deals effectively. Chicago Atlantic's track record in underwriting alternative industries could be a significant asset to the joint venture, potentially increasing its appeal to investors seeking differentiated investment opportunities. The historical performance of Chicago Atlantic Real Estate Finance, Inc., as a leading REIT based on total returns since its IPO, lends credibility and may attract further investor interest in the newly formed joint venture.
Furthermore, the renaming of SSIC to Chicago Atlantic BDC, Inc. may enhance brand recognition and reflect a unified strategic vision, which could positively influence market perception. The success of the joint venture will depend on its ability to leverage the combined deal sourcing capabilities and underwriting discipline to maintain or improve investment performance in a competitive landscape.
The transaction is contingent upon certain stockholder approvals and customary closing conditions, which introduces a degree of regulatory and approval risk. The necessity for stockholder approval highlights the importance of investor sentiment and governance in such transactions. It is critical for stakeholders to understand the implications of these approvals, as they can affect the timeline and finalization of the deal.
In addition, the renaming of SSC and SSIC as part of the joint venture carries legal and regulatory considerations, including the need to ensure compliance with securities laws and regulations governing name changes and corporate restructuring. The legal intricacies of forming a joint venture also involve due diligence to ensure that the interests of all parties are adequately protected and that the terms of the agreement align with industry standards and legal requirements.
Upon closing of the Joint Venture, SSIC would be renamed Chicago Atlantic BDC, Inc. and SSC would be renamed Chicago Atlantic BDC Advisers, LLC.
The transaction follows the initial public offering and listing of the shares of Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI) in 2021. REFI has been one of NASDAQ’s leading commercial mortgage real estate investment trusts (REITs) based on total returns since its IPO.
“This transaction is an accretive opportunity that has the potential to benefit shareholders as well as the Chicago Atlantic and Silver Spike team members,” said John Mazarakis, Chicago Atlantic Founding Partner and Executive Chairman of REFI.
“Chicago Atlantic’s deal sourcing and disciplined approach to underwriting alternative industries has proven its value and serves as a stepping stone to this transaction,” added Andreas Bodmeier, Chicago Atlantic Founding Partner. “We are excited about the potential to jointly elevate the performance of SSIC for the benefit of all shareholders.“
Deal closing is expected for mid-2024.
About Chicago Atlantic
Chicago Atlantic is a private market investment manager combining deep expertise with an entrepreneurial approach to multi-asset class investing. Founding Partners John Mazarakis, Tony Cappell and Andreas Bodmeier established Chicago Atlantic in 2019 and have grown the firm’s private investment strategies to include opportunistic credit, private equity and impact investing. Chicago Atlantic has made over
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Alise M. Edgcomb
Managing Director, Public Relations
(419) 202 – 3988
aedgcomb@chicagoatlantic.com
Source: Chicago Atlantic
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