The business to be sold, which is based in New York, provides financial guarantee insurance on the debt obligations of issuers across the globe


Image: Star Insurance to acquire Syncora Guarantee. Photo: courtesy of rawpixel/Pixabay.

Bermuda-domiciled Syncora has agreed to sell its financial guarantee insurance subsidiary Syncora Guarantee to Star Insurance for $392.5m (£323.61m) in an all-cash deal.

Star Insurance is an entity organised by GoldenTree Asset Management on behalf of the latter’s managed funds and accounts.

Operations on Syncora Guarantee

Syncora Guarantee, which is based in New York, offers financial guarantee insurance on the debt obligations of issuers across the world. The company guarantees US municipal bonds, debt backed by utilities and selected infrastructure projects, asset-backed securities, specialised risks, collateralized debt obligations (CDOs), and others.

The sale of the financial guarantee insurance subsidiary follows an announcement made by Syncora in March 2019, that of starting a formal review process to explore and assess strategic alternatives for the business. The alternatives included a sale of part or all of the company or Syncora Guarantee.

The holding company said that it received solicitations of interest from dozens of potential buyers. Furthermore, the company revealed signing of non-disclosure agreements with 20 potential buyers, while receiving bids from five interested parties.

After various bidding rounds, the company’s board selected GoldenTree’s bid as the most attractive.

Syncora CEO and president Frederick Hnat said: “This agreement is the culmination of years of hard work and focus on our core strategies of risk reduction, asset monetization and enhancing value for our shareholders.

“We are very pleased with the terms of the agreement with Star Insurance, an entity organized by GoldenTree, one of the largest independent asset managers focused on credit, and believe that it helps accomplish our long stated goal of optimizing shareholder value and returning capital to shareholders.”

The transaction is likely to be closed by the end of the fourth quarter of this year or during the first quarter of next year. The closing of the deal will be based on approval from the New York Department of Financial Services, clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and other customary conditions.