Simpson Thacher & Bartlett is advising longtime private equity client KKR on its purchase of a 24.9 percent stake in Nephila Capital, an $8 billion firm that provides reinsurance for catastrophes like earthquakes, hurricanes, and other natural disasters.
While the financial terms of KKR’s investment in Nephila have not been disclosed, a press release announcing the transaction states that KKR will acquire its shares from Nephila’s management and minority stakeholder the Man Group, the world’s largest publicly traded hedge fund manager. (Man Group’s stake in Bermuda-based Nephila will be reduced from 25 percent to 18.75 percent following the transaction.)
Craig Sklar, a corporate finance partner at New York’s Seward & Kissel, is serving as lead counsel to Nephila on the deal with KKR. Seward & Kissel is known for its hedge fund and private investment work—the firm’s founding partner passed away a year ago next month—and Sklar previously advised hedge fund manager Emerging Sovereign Group on its sale of a 55 percent stake to private equity giant The Carlyle Group in 2011.
Taking the lead on the deal for KKR is corporate partner Gary Horowitz, a member of Simpson’s executive committee and a longtime M&A adviser to the New York–based private equity firm. Even when the private equity boom went bust beginning in 2008, Horowitz and Simpson have continued handling deals for KKR, from its $29 billion acquisition of credit card processor First Data that year to its $2.4 billion buy of pharmaceutical giant Pfizer’s Capsugel division and $7.2 billion purchase of oil and gas company Samson in 2011.
In November, Simpson advised KKR portfolio company Sealy on its $1.3 billion sale to fellow mattress-maker Tempur-Pedic, according to our previous reports. Horowitz also led a team of Simpson lawyers advising KKR last year on its purchase of Prisma Capital Partners, an investment firm focused on hedge funds, as well as the $6.7 billion sale of European pharmacy group Alliance Boots to Walgreens. Last week Horowitz and tax partner Katharine Moir advised KKR on its partnership in a merchant banking business run by KKR and an arm of the Canadian Pension Plan Investment Board.
Former Simpson partner David Sorkin, who like Horowitz was once a member of the firm’s executive committee, has served as general counsel of KKR since 2007. Former Simpson attorney Adam Smith is a member of KKR’s capital markets team. Sorkin and Christopher Lee led an in-house team on purchase of a stake in Nephila. K&L Gates financial services practice leader Michael Caccese in Boston is serving as regulatory counsel on the deal for the private equity giant, while Wakefield & Quin senior corporate counsel Ian Stone is providing Bermuda counsel.
Simpson isn’t the only firm that KKR has recently kept busy with transactional work. Kramer Levin Naftalis & Frankel is representing investment firm Weld North—which is backed by KKR—on its acquisition this month of a controlling stake in juice and raw foods purveyor Organic Avenue. KKR turned to Latham & Watkins for counsel last November on its purchase of insurance brokerage firm Alliant Insurance Services from The Blackstone Group for an undisclosed sum. (As it happens, Simpson advised Blackstone, another longtime private equity client, on that deal.)
The deal this week between KKR and Nephila occurs during what has been a slow time for M&A in the financial services sector.
Latham recently advised The Carlyle Group on the sale of its Open Solutions financial technology unit to Fiserv for a scant $55 million in cash, although the transaction includes the assumption of roughly $960 million in debt, according to The Hartford Courant.
And teams of lawyers from Skadden, Arps, Slate, Meagher & Flom, Linklaters, Irish firm William Fry, and Swiss shop Lenz & Staehelin advised money management giant BlackRock on its purchase earlier this month of an exchange-traded fund unit of Credit Suisse. Terms of the deal were not disclosed, although U.K. publication Legal Week reports that Credit Suisse was advised by Clifford Chance, offshore firm Maples and Calder, and Swiss shop CMS von Erlach Henrici.