ECN Capital Corp. announced it has entered into a definitive agreement with funds managed by Stone Point Capital LLC, a private equity firm focused on investing in financial services, to sell all of the issued and outstanding equity interests in ECN Kessler Holdco LLC (the “Kessler Group”), a wholly owned, indirect subsidiary of the Company through which ECN operates the Kessler Group business. Subject to standard adjustments in accordance with the transaction agreement, the sale is expected to generate cash proceeds of $210 million.
Following the closing of the transaction, ECN Capital expects to use the net proceeds to initially pay down debt and then redeploy a portion of the proceeds to accelerate its tuck-in acquisition strategy in its prime marine and RV financing business.
“ECN Capital’s primary strategic directive has been to manage and maximize returns on investor capital in the specialty finance sector. Allocation of capital is one of management’s most important jobs and decisions need to be made to maximize future potential. While the Kessler Group remains an excellent business, ECN Capital intends to concentrate its future investments in its manufactured housing and marine and RV financing businesses where we see extraordinary opportunities like our successful tuck-in of Source One in December 2021 and our investment in Intercoastal Financial Group, (IFG) which was announced on August 11, 2022,” said Steven Hudson, CEO of ECN Capital.
“I want to thank Scott Shaw and his entire team at the Kessler Group for their contributions. Stone Point can build on the successes we’ve had over the last several years to place the Kessler Group in the best position to succeed in its next phase of growth,” said Hudson.
“Following closing of the transaction, ECN Capital intends to continue its success with three fantastic operating businesses in Triad, Source One and IFG,” Hudson continued. “ECN Capital will continue to work with these operating companies to meaningfully expand product menus and improve operational excellence. We believe that this transaction will drive significant opportunities to continue to maximize shareholder value in the future.”
The transaction is subject to customary regulatory approvals and the satisfaction of the other closing conditions set forth in the transaction agreement and is expected to close late in the third quarter of 2022 or early in the fourth quarter of 2022.
Truist Securities, Inc., CIBC World Markets Inc., BMO Capital Markets and Solomon Partners, L.P. acted as financial advisors to the Company and Baker Hostetler LLP and Blake, Cassels & Graydon LLP acted as legal counsel to the Company in connection with the transaction. Kirkland & Ellis LLP acted as legal counsel to Stone Point in connection with the transaction.
A summary presentation outlining the transaction can be found here.