GWG Holdings Inc. (NASDAQ: GWGH), a sponsor of non-traded life settlement investment programs, has partnered with The Beneficient Company Group L.P. in a strategic transaction valued at up to $800 million, including a $150 million cash investment in GWG Holdings.
Dallas-based Beneficient markets financial products and retirement funds to mid-to-high net worth individuals and institutional investors.
As part of the strategic relationship, GWG will acquire 82 percent of the outstanding Beneficient master limited partnership units from existing investors. Beneficient will have more than $800 million of tangible financial assets pro forma for the transaction, which is expected to close around April 30, 2018, pending regulatory and shareholder approvals.
“Beneficient is partnering with GWG because they’ve identified the life insurance asset class as a key enhancement to their diversified endowment portfolio of high-quality alternative assets for which they provide loans and liquidity,” said GWG CEO Jon Sabes.
He added, “While GWG will continue to execute our announced strategies to our utmost capacity, we also look forward to rolling out Beneficient’s innovative alternative asset liquidity products to independent broker-dealers and RIAs once Beneficient obtains its pending regulatory approvals.”
GWG also plans to enter into a $400 million, four-year commercial loan with the company for its liquidity product build-out.
GWG CFO William Acheson said in a statement that the transaction will potentially double GWG’s assets to more than $1.6 billion and quadruple its total equity to more than $500 million.
Assuming the maximum size of $800 million, the transaction will be financed from the issuance of $400 million of GWG common stock at $10.00 per share, $400 million in five-year bonds, and $150 million in cash from an affiliated Beneficient unitholder.
GWG has experienced 28 percent year-over-year growth in its portfolio of life insurance policies, becoming one of the largest buyers of life insurance policies in the secondary market in 2017.
GWG Holdings, the parent company of GWG Life and Life Epigenetics, is a specialty finance company and a leading purchaser of life insurance policies in the secondary market. Since 2006, GWG Life has provided seniors with $457 million in exchange value for their illiquid life insurance and, as of September 30, 2017, owned a portfolio of more than $1.6 billion in face value of policy benefits.