Massive Merger Spurns Fight Over Wall Street Secrets
Imagine your favorite sports team being forced to hand over its playbook to a bitter rival. That would irk any sports fan.

Now imagine a similar scenario, but it’s Wall Street insiders being forced to hand over their precious trade secrets.

That exact fact pattern is unfolding due to a proposed merger between Dyal Capital and publicly traded Owl Rock Capital — a deal that has spawned multiple feisty lawsuits.

“We Honor Our Deals”
Let us set the stage: Dyal Capital, a division of asset manager Neuberger Berman, specializes in buying minority stakes in other private investment companies. A bit like nesting dolls.

In recent years Dyal has acquired stakes in firms including Golub and Sixth Street Partners, two players in the private lending space.

Now Dyal is merging with Owl Rock Capital, another financier specializing in private lending — a deal that would create a $12.5 billion investment behemoth.

The Rub: Golub and Sixth Street are concerned that Dyal — which has access to sensitive information about their operations and some amount of internal influence — will quickly morph from an investor and partner into a competitor:

• In a recent New York State Supreme Court filing, Golub said, “Dyal threatens to compete with Golub while retaining a partnership interest in it," claiming the merger was “untenable and forbidden” under the terms of its deal.
• Sixth Street Partners has filed to block the merger in Delaware state court, arguing it sold a stake “on the fundamental understanding that Dyal would act as a partner — not a competitor.”

For its part, Dyal has attempted to downplay concerns, claiming it has “crafted a robust and comprehensive information control policy designed to restrict access to confidential partner manager information.”

The Icing On The Cake: The tie-up of Dyal and Owl Rock is wrapped up in another Wall Street fad. The pairs merger is being backed by a SPAC called Altimar Acquisition Corp.

The Takeaway: There has never been a more lucrative time to be a Wall Street lawyer.

Securing a deal, therefore, requires a bit of creativity, and have Dyal Capital Partners, Owl Rock Capital Partners and HPS Investment Partners ever done so with this extraordinary circle-jerk: In essence, an asset manager that invests in hedge-fund stakes (Dyal) is simultaneously spinning off from its owner (Neuberger Berman) by merging with a SPAC backed by a hedge fund (HPS) that is partially owned by said asset manager, and merging with a second hedge fund (Owl Rock) that is also owns a chunk of, in which Frankestein’s monster the former parent will remain a major investor. Makes total sense, right?

Dyal and Owl Rock said they have been discussing a deal with a special-purpose acquisition company called Altimar Acquisition Corp.

The Wall Street Journal earlier reported on the transaction, which would value the combined asset managers at about $13 billion, according to people familiar with the matter….

Dyal has previously floated the idea of an IPO of one or more of its funds as a possible way to allow its investors the option of monetizing their holdings, the Journal has reported. The transaction being discussed, however, is an IPO of the management company and wouldn’t alter the liquidity opportunities for fund investors.

Of course: Who would want to undertake a complicated financial transaction to benefit them? And who says SPACs are just back-slapping masturbatory nonsense that will end in tears?

Dyal Capital in Talks to Combine With Owl Rock Capital [WSJ]
Ex-Barclays investment bank chairman plans to raise $250 million with blank-check company [MarketWatch]
Australia’s Macquarie to buy Waddell & Reed Financial for $1.7 billion [Reuters via CNBC]