Colony Capital In Equity Sale Proposals

by Stewart Douglas

Story link: Colony Capital In Equity Sale Proposals

US based private equity firm Colony Capital today announced that it was considering selling a portion of its company to a high profile Middle East investment fund, according to reports from a company spokesperson today which would see it sacrifice a degree of control in the way its business is run.

The privately held investment firm is rumoured to have been approached by a Middle Eastern collective investment fund interested in buying a portion of equity in the company, which it is reported to consider as an ‘interesting’ proposal.

The Abu Dhabi government backed fund Mubadala has already acquired substantial stakes in other investment companies over the course of the year, including a 7.5% holding in Carlyle, a holding in Apollo Management and a 10% stake in Dubai International Management.

This kind of proposal is thought to be particularly viable for many private investment companies, given that they are mainly privately held. 

Thus a small sale of capital enables firms to raise finance without sacrificing overall control in terms of voting rights.  It is also thought to be helpful for private equity firms considering an IPO as a guide for launch price.

Colony has enjoyed a profitable few years, growing steadily over the period to increase the size and statures of its acquisitions and dividend incomes.  Notably this month it rounded off its most considerable ever acquisition, taking over Station Casinos in a deal rumoured to be worth $8.9 billion.

It is thought that any sale of equity would enable Colony to increase capital reserves in order to increase their investment holdings and bolster existing equity stakes, whilst it could prove profitable for Mubadala with a view to receiving dividend payments.