Overview
Locke Lord strives to add real value to the businesses of our investment management clients by combining representation of both local money managers and investment management subsidiaries of leaders in the insurance and financial services industries. In addition, we advise pension plan sponsors, charitable foundations, and independent mutual fund directors in connection with investment adviser and investment company concerns.
Locke Lord has substantial experience representing clients in sophisticated private placement and similar transactions. We are well positioned to assist investment advisers, investment companies and hedge funds in the purchase of complex privately offered instruments.
We help our clients:
- Deal with day to day regulatory and compliance concerns affecting investment funds, federally covered investment advisers and state registered investment advisers;
- Organize private investment companies, hedge funds and mutual funds, and sell interests in those funds;
- Negotiate and draft investment management, sub-advisory, repurchase and secured lending agreements;
- Address matters associated with acquiring and selling investment advisers, including protecting accounts and retaining representatives; and
- Deal with federal and state registration and compliance matters, including Securities and Exchange Commission audits and examinations, advertising, soft dollar issues and management of ERISA accounts.
Representative Investment Management Engagements
We regularly represent clients in a variety of complex engagements and transactions in the investment management area. Locke Lord has represented:
- A mutual insurance company in the development of a low cost flexible premium individual variable annuity, including filing its variable annuity registration statement on Form N-4 and certain related fund registration statements on Form N-1A.
- A major financial services firm in its bid for a private client focused investment manager with in excess of $4 billion under management.
- A mutual fund manager with over $180 billion under management in connection with its Rule 38a-1 review of its sub-advisers, principal underwriter and transfer agent.
- The sellers in the sale of a private-client money manager with approximately $330 million under management to a publicly traded financial holding company.
- Federal savings bank subsidiaries of insurance companies in connection with their investment adviser regulatory compliance.
- A well known variable products and mutual fund complex in its $1.2 billion acquisition of an investment adviser, broker-dealer and variable products/fund complex.
- A special committee of independent directors of a publicly traded investment manager with approximately $60 billion under management, in connection with the sale of the remaining public shares to its parent.
- A leading life and financial services complex in its acquisition of a national, full-service securities brokerage firm which, at the time, was one of the largest independent investment advisers and broker-dealers in the United States (with approximately 2400 registered representatives).
- A number of investment managers to high net worth individuals and related entities.
- A major insurance company and a major financial services firm as purchaser’s counsel in connection with their bids for businesses with investment adviser and mutual fund segments in transactions valued at approximately $400 million and $1.3 billion respectively.
- The disinterested trustees of registered investment companies.
Strategic and Private Investment Experience
We represent insurance companies and other financial services institutions in connection with strategic investments in, and associated business arrangements with, a variety of their strategic business partners and financial investment transactions, including traditional private placements, equity and debt funds, venture capital investments and PIPES transactions. Investment transactions in which our lawyers have participated include representation of:
- A major reinsurance company and its affiliates in their roles as purchasers of limited partnership interests in numerous domestic and offshore venture capital and private equity investment fund partnerships;
- A major U.S. insurance holding company in the investment of $85-175 million in a minority interest in a limited liability company, and in the $12 million purchase of convertible preferred shares issued by a strategic business partner;
- A financial services company investment arm as lead investor in the private placement of senior notes of a bank holding company;
- An insurance client regarding A-B exchange, registration and other rights related to a 144A private placement and the evaluation and exercise of certain of those rights;
- Major insurance companies in numerous note and warrant private transactions in various manufacturing, distribution and other operating companies;
- An insurance holding company in connection with its investment of up to $6.5 million in senior secured convertible indebtedness issued by a U.S. based consulting company;
- A major property and casualty insurance company in its investment in a jet aircraft engine manufacturing and distribution company;
- A mutual life insurance company in the sale of several portfolio companies; and
- Certain foreign insurance companies in U.S. private equity investments in airlines services business, automotive business, manufacturing companies and other insurance companies.
Real Estate Investments
Real estate continues to be an important source of investment for life insurance companies and other investors. Locke Lord represents insurance companies and their affiliates in a variety of real estate fund investments and direct real estate investments. We have extensive experience in representing insurance companies in mortgage financing transactions, including the restructuring and workout of troubled real estate investments and sales of mortgage portfolios into real estate mortgage investment conduits (REMICs) and other pools. Investment transactions in which our lawyers have participated include representation of:
- An international reinsurer in the investment of various mortgage-backed derivative products;
- A major reinsurance company and its affiliates in their roles as purchasers of limited partnership interests in numerous real estate investment fund partnerships;
- A life insurance company as lender in a $57 million mortgage financing transaction involving four cross-defaulted, cross-collateralized office building projects owned by a publicly traded real estate investment trust;
- A life insurance company as lender for construction loans for three separate hotel projects involving single asset development companies principally owned by the same developer, in aggregate financings totaling $95 million;
- An affiliate of a non-U.S. reinsurance company in connection with the investment in minority interests in real estate in New York and New Jersey;
- A life insurance company client in connection with funding a construction loan on a 315-unit apartment complex in Southern California;
- Trustee and ground lessor in connection with the sale of two large office buildings in Southern California to a major life insurance company; and
- A REMIC lender in connection with the origination of the mortgage transactions involving multi-family, industrial, suburban office and retail facilities, which loans were bundled by the conduit and placed in publicly syndicated mortgage pools.
Structured Finance
There continues to be significant innovation in the type and variety of structured finance investments. Locke Lord represents insurance companies and other investors in connection with a wide range of structured investments, including guaranteed investment contracts, collateralized debt obligations (CDOs), collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), equity and debt investment funds, financial asset securitization investment trusts (FASITs) and others. Investment transactions in which our lawyers have participated include representation of:
- A U.S.-based insurance company and its affiliates in the purchase of approximately $330 million of highly-structured and proprietary guaranteed investment contracts issued by a Bermuda issuer;
- A foreign financial institution in connection with the design of various investment structures utilizing FASITs to achieve tax, regulatory and investment objectives for foreign insurers;
- A financial guaranty insurer in a motion picture receivables securitization for a major film studio with an insured value of $165 million and a music royalty receivables securitization with insured value of $30 million;
- A national credit rating agency in CDO transactions;
- Numerous thrifts in a CMO program of a major investment bank; and
- A major German reinsurance company as issuer in connection with an offshore placement of $400 million of guaranteed subordinated step-up floating rate notes.
Alternate Investments
“Alternative assets,” including investments in hedge funds, bank loans and derivative financial instruments, have emerged as risk management tools as well as a growing source of investment for many financial services companies. We advise our financial industry clients regarding transactions involving alternative assets and have structured several sophisticated financial products. Our attorneys also regularly advise insurers regarding insurance regulatory and classification matters pertaining to various investments. Investment transactions in which our lawyers have participated include representation of:
- Institutional investors in the acquisition and disposition of approximately $250 million in distressed bank loans;
- Insurance company clients regarding the structuring and evaluation of hybrid securities for purposes of NAIC SVO classification;
- An institutional investor in its $125 million investment in a class of ordinary shares of a Cayman Islands company that invests in hedge funds and hedge fund-type strategies;
- Various clients in the negotiation and structuring of interest rate swaps; and
- An insurance company in the acquisition of approximately $50 million in contingent insurance commission receivables.
Restructuring Transactions
Taking action regarding nonperforming or defaulted investments has been an increasing focus of many investors. We advise insurance companies and other investors regarding the restructuring and liquidation of collateralized obligations, partnership interests and other debt and equity investments, and involve our bankruptcy attorneys. Investment transactions in which our lawyers have participated include representation of:
- A state insurance fund in connection with the restructuring and liquidation of its $10 million senior note investment in a market value collateralized debt obligation;
- An adviser to an investment fund controlled by a major insurer regarding methods of unwinding and restructuring $300 million in collateralized debt obligations on verge of default;
- A life insurer’s portfolio manager as the principal secured creditor ($75 million) in the Chapter 11 liquidation case of an aluminum processing company, and in the Chapter 11 sale of an affiliated company;
- A life insurer in litigation in several venues to protect and recover its investments as a $40 million bondholder in a bankruptcy case and subsequent actions;
- The Ad Hoc Committee of Securitization Holders in a U.S.-based international insurance and financial services holding company’s Chapter 11 cases, representing several billion dollars of investments by life insurers, pension funds and other investors;
- A life insurance company in connection with the restructure of debt and the lender’s final disposition of a property that was originally financed by the client in connection with the sale of units in a cooperative housing project.