AllianceBernstein Liquidates Public-Private Investment Partnership at an 18.7% Internal Rate of Return for Treasury
NEW YORK, Oct. 9, 2012 /PRNewswire/ -- AllianceBernstein L.P. (AllianceBernstein), today announced it has returned all of the capital raised, at a profit, from its AllianceBernstein Legacy Securities Fund (Public-Private Investment Partnership or "PPIP") to investors. The U.S Department of the Treasury, which was a 50% investor in the Fund, has received a total of $1.54 billion in distributions with respect to its equity investment (consisting of Treasury's $1.06 billion investment in the Fund and approximately $474 million in profit), representing an internal rate of return (IRR), net of fees and expenses, of 18.7% since the Fund's inception in October 2009. In addition, the Fund distributed approximately $12.0 million in warrant proceeds to Treasury and has repaid with interest $2.13 billion in debt that the Treasury provided to the Fund. The Fund was managed by AllianceBernstein and its partners Greenfield Partners LLC, Rialto Capital Management LLC, and Altura Capital Group LLC.
"It was an honor to have been one of the few firms selected to participate in PPIP and it is equally gratifying that the program was a success from both a policy and investment perspective," said Doug Peebles, head of Fixed Income for AllianceBernstein. "The partnership allowed capital to be injected into the mortgage-backed security market at a critical time in our nation's history and, it turned out to be as advantageous as we hoped for both the Treasury and our investors, who realized a healthy return on their investment."
Michael Canter, CIO of AllianceBernstein Legacy Securities Fund and Head of Securitized Assets, added, "While we still see opportunities in this part of the market, we felt that this was the best time to liquidate the Fund and return capital to the Treasury and our private investors. By doing so, we were able to maximize investor returns consistent with our objective and before the end of the Fund's investment period."
The Public-Private Investment Program was announced in March 2009 to support market functioning and facilitate price discovery in the markets for legacy non-agency Residential Mortgage-Backed Securities (RMBS) and Commercial Mortgage-Backed Securities (CMBS). The purpose of PPIP was to draw private capital into the market for legacy RMBS and CMBS by providing debt financing as well as a matching equity investment from the Treasury. By providing this financing, PPIP was designed to help restart the market for these securities, thereby helping financial institutions begin to remove these assets from their balance sheets and allowing for a general increase in credit availability to consumers and small businesses. In addition to the policy objectives, the investment objective of PPIP was to generate attractive returns for taxpayers and private investors through long-term opportunistic investments in legacy RMBS and CMBS by following predominantly a buy-and-hold strategy.
AB Legacy Securities Fund
The AllianceBernstein Legacy Securities Fund was one of nine original Public-Private Investment Funds in the program. The Fund held its initial closing on October 2, 2009 and raised, in total, $1.15 billion in committed equity capital from private investors, which was matched 100% by Treasury, representing $2.3 billion in committed equity capital. Treasury also provided $2.3 billion of debt capital, representing total Fund purchasing power of $4.6 billion, of which approximately 92.5% was deployed.
AllianceBernstein is a leading global investment management firm that offers high-quality research and diversified investment services to institutional investors, individuals and private clients in major world markets.
At September 30, 2012, AllianceBernstein Holding L.P. (NYSE: AB) owned approximately 37.9% of the issued and outstanding AllianceBernstein Units and AXA, one of the largest global financial services organizations, owned an approximate 64.2% economic interest in AllianceBernstein.
Additional information about AllianceBernstein may be found on our internet site www.alliancebernstein.com.
SOURCE AllianceBernstein L.P.