By Svea Herbst-Bayliss
(Reuters) - Financial services firm The Beneficient Co Group, L.P. has agreed to go public through a merger with a blank-check vehicle in a deal valuing it at about $3.5 billion, the companies said on Tuesday.
Beneficient provides liquidity and services to qualified individuals and smaller institutions invested in private equity, venture capital and other alternative assets. The company has disclosed providing investors $1.1 billion in liquidity, including nearly $400 million over the past year.
The deal with Avalon Acquisition Corp can fetch approximately $200 million in gross proceeds for Beneficient following previous private capital raises. Beneficient says access to public markets will help finance more liquidity transactions in the roughly $12 trillion alternatives sector.
The merger comes at a challenging time for the special purpose acquisition company (SPAC) market as several returned the money they raised after failing to find suitable targets.
Beneficient is operating profitably but many SPAC transactions involve companies that are not yet profitable.
The market for providing liquidity to investors in alternative assets has historically been dominated by firms such as Lexington Partners and Blackstone (NYSE:BX) Strategic Partners, who can charge up to 20% in transaction fees, analysts said.
"We are working to democratize the industry starting with a simple, secure, rapid and cost-effective solution to what we saw as investors' most foundational and pressing need: liquidity," Beneficient CEO Brad Heppner said in a statement.
SPACs are publicly listed companies that are raised with the intention of merging with a private company, which then goes public through the merger.
Avalon is led by Donald Putnam, founder of Grail Partners and Putnam Lovell Securities, and Craig Cognetti, a partner at Grail Partners.
Beneficient's Board of Directors includes two former U.S. Federal Reserve Bank presidents, Dennis Lockhart and Richard Fisher, and private equity industry pioneer Tom Hicks.
After the deal closes, Dallas, Texas-based Beneficient expects to trade on Nasdaq.