Institutional Financial Markets, Inc. (NYSE AMEX: IFMI) (“IFMI”), a leading financial services company specializing in credit-related fixed income investments, today announced the sale, through a subsidiary, of its investment advisory agreements relating to advisory services to a series of closed-end, distressed debt funds, known as the “Strategos Deep Value Funds,” and certain separately managed accounts to a new entity owned by Frederick Horton and Alex Cigolle, which will be renamed “Strategos Capital Management, LLC” shortly after closing (the “Buyer”). Messrs. Horton and Cigolle have served as IFMI’s portfolio managers for the Strategos Deep Value Funds and these managed accounts since inception of the respective funds and managed accounts. Buyer will also receive certain services, intellectual property, books and records, software, data and rights to the “Strategos” name. As of February 28, 2011, the assets under management with respect to these investment advisory agreements were approximately $400 million. The Strategos portfolio management team will join the new entity that will continue to be based in Philadelphia.
IFMI will retain its ownership interests in the general partners of the Strategos Deep Value Funds and its rights to incentive fees from the Strategos Deep Value Funds.
Pursuant to the terms of the purchase agreement, Buyer will pay a purchase price equal to 10% of all revenue, net of certain expenses, earned by Buyer between the closing date and December 31, 2014 and will assume substantially all of the expenses of managing the Deep Value Funds and the separately managed accounts. In addition, in the first quarter of 2015, IFMI will have a one-time option to purchase a right to receive 10% of all revenue earned and collected thereafter by Buyer for a purchase price in an amount equal to 20% of revenue earned and collected by Buyer for the period commencing on January 1, 2014, and ending on December 31, 2014.