Business Context and Reporting Period
This Form 8-K, dated November 17, 2020, reports the consummation of a business combination between GCM Grosvenor Inc. (the "Company") and CF Finance Acquisition Corp. ("CFAC"). Following the merger, CFAC ceased to exist, and the Company became the surviving entity. The transaction involved the redomiciling of Grosvenor Capital Management Holdings, LLLP ("GCMH") to Delaware and the issuance of new equity classes.
Key Financial Metrics and Capital Structure
The filing details the capital raised and the resulting ownership structure immediately following the transaction:
- Trust Account Proceeds: The Company received $120.4 million from CFAC's trust account following redemptions.
- PIPE Investment: PIPE Investors purchased 19,500,000 shares of Class A common stock for an aggregate consideration of $195.0 million.
- Forward Purchase: The CFAC Sponsor purchased 3,500,000 shares of Class A common stock and 1,500,000 warrants for $30.0 million.
- Unregistered Sales: The Company issued 144,235,246 shares of Class C common stock to GCM V for $1.00 and 900,000 warrants to Holdings.
- Ownership Structure:
- GCM V: ~78.3% of outstanding common stock (Class C), representing ~75.0% of voting power.
- PIPE Investors: ~10.6% of outstanding common stock (Class A), representing ~12.2% of voting power.
- CFAC Former Public Stockholders: ~6.3% of outstanding common stock (Class A), representing ~7.3% of voting power.
- CFAC Sponsor and Founder Shareholders: ~4.8% of outstanding common stock (Class A), representing ~5.5% of voting power.
Note: This filing does not provide specific revenue, profit, cash flow, margin, or debt figures for the combined entity. Financial statements for the acquired businesses and pro forma information are referenced as Exhibits 99.1 through 99.6 but are not detailed in the text of this report.
Material Changes
The primary material change is the completion of the merger and the restructuring of the Company's capitalization. Key changes include:
- Conversion of all CFAC common stock and warrants into Company Class A common stock and warrants.
- Issuance of Class C common stock to GCM V, granting significant voting control.
- Adoption of a new capital structure with authorized shares for Class A, Class B, Class C common stock, and preferred stock.
- Implementation of a dual-class voting structure where Class C shares hold up to 10 votes per share prior to a defined "Sunset Date."
Agreements, Governance, and Risks
Material Agreements:
- Stockholders' Agreement: Entered into by the Company, GCMH Equityholders, and GCM V.
- Registration Rights Agreement: Amended and restated agreement with the CFAC Sponsor, GCMH Equityholders, and PIPE Investors.
- Tax Receivable Agreement: Entered into with GCMH and GCMH Equityholders.
- Partnership Agreement: Fifth Amended & Restated LLLPA for GCMH.
Governance Changes:
- Board of Directors: Jonathan R. Levin, Angela Blanton, Francesca Cornelli, Stephen Malkin, Blythe Masters, and Samuel C. Scott III were appointed as directors, joining Michael J. Sacks.
- Leadership: Michael J. Sacks was appointed Chairman and will continue as Chief Executive Officer.
- Audit Committee: Angela Blanton, Francesca Cornelli, Blythe Masters, and Samuel C. Scott III were appointed, with Blythe Masters serving as Chair.
Risks and Contingencies: The filing notes that the description of transactions is qualified by the full text of the Transaction Agreement and other exhibits. The dual-class voting structure presents a governance risk where Class C holders maintain significant control over corporate decisions until the Sunset Date.
Investor Verification Checklist
- Verify the specific terms of the Tax Receivable Agreement (Exhibit 10.3) to understand potential future cash outflows.
- Review the "Sunset Date" definition in the Amended & Restated Charter (Exhibit 3.1) to determine when Class C voting rights will convert to one vote per share.
- Examine the Pro Forma Financial Information (Exhibit 99.6) for a consolidated view of the company's financial position post-merger.
- Confirm the redemption amount of $120.4 million against the initial trust account balance to assess the level of shareholder dissent.
- Review the Stockholders' Agreement (Exhibit 10.1) for any lock-up provisions or restrictions on share transfers.