Alti Global, Inc. current report, 03 January 2023

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Alti Global, Inc. (formerly Alvarium Tiedemann Holdings, Inc.) Form 8-K Summary

Reporting date: January 9, 2023; earliest event January 3, 2023. The filing reports the completion of the domestication and business combination involving Cartesian Growth Corporation, Tiedemann Wealth Management Holdings, the TIG entities, and Alvarium Investments Limited. The registrant was renamed Alvarium Tiedemann Holdings, Inc. and subsequently trades as Alti Global, Inc. under the symbols ALTI and ALTIW.

Business Context and Reporting Period

  • Cartesian domesticated from the Cayman Islands to Delaware on December 30, 2022 and ceased to be a shell company upon closing of the business combination on January 3, 2023.
  • The combined company is an investment and wealth-management business consisting of Tiedemann Wealth Management, the TIG entities, and Alvarium.
  • The filing includes historical financial statements and management discussion for the acquired businesses for fiscal years 2019–2021 and the nine months ended September 30, 2022 and 2021, together with unaudited pro forma information. Detailed consolidated results for the post-combination company are not presented in the filing text.

Key Financial Metrics, Capitalization, Debt and Liquidity

  • PIPE investment: Investors subscribed for 16,936,715 Class A shares at $9.80 per share, for aggregate proceeds of approximately $165.0 million, before related transaction effects.
  • AHRA carveout: Alvarium sold Alvarium Home REIT Advisors Limited on December 30, 2022 for approximately £24 million in the form of a promissory note. AHRA contributed $3.9 million to combined EBITDA for the nine months ended September 30, 2022 and had approximately $1.0 billion of AUA at that date.
  • Credit facilities: The company entered into a senior secured credit agreement consisting of a $100 million term loan and a $150 million revolving credit facility, both generally maturing January 3, 2028.
  • Credit facility proceeds were used to refinance approximately $43.6 million of TIG debt, approximately $19.9 million of Tiedemann debt, approximately £10.4 million of Alvarium debt, approximately £20.1 million under each of two additional Alvarium facilities, and to fund transaction costs, working capital and permitted acquisitions.
  • Borrowings bear interest based on grid pricing tied to the company’s total leverage ratio and are secured by substantially all assets of the borrower and guarantors, subject to exclusions. The agreement includes leverage and interest-coverage covenants.
  • Post-closing capitalization: 112,521,029 common shares were outstanding, consisting of 57,488,068 Class A shares and 55,032,961 Class B shares. An additional 20,399,877 shares were issuable upon exercise of outstanding warrants.
  • The filing does not provide a clear post-combination value for revenue, net income, operating cash flow, cash balances, liquidity or margins. Historical and pro forma amounts are incorporated by reference through exhibits.

Material Changes Versus the Prior Comparable Period

  • The transaction transformed Cartesian from a SPAC shell into an operating investment-management company and changed its corporate name, governance structure, ownership and securities.
  • Class A common stock and warrants began trading on Nasdaq under ALTI and ALTIW on January 4, 2023.
  • The company replaced Marcum LLP with KPMG LLP as its independent registered public accounting firm. Marcum’s prior reports included an explanatory paragraph regarding substantial doubt about Cartesian’s ability to continue as a going concern.
  • The filing identifies a historical material weakness in Cartesian’s internal controls over financial reporting related to accounting for complex financial instruments through September 30, 2022.
  • The company adopted a new equity incentive plan reserving 11,788,132 Class A shares and an employee stock purchase plan initially reserving 1,813,559 Class A shares.
  • The company has not paid dividends and currently expects to retain earnings, if any, for business operations.

Guidance, Outlook, Risks, Contingencies and Unusual Items

  • No formal revenue, earnings, margin, cash flow or other financial guidance is provided in the filing.
  • The company states that expected benefits from the business combination, growth and profitability are subject to substantial uncertainty.
  • Principal risks include retention of clients and key personnel, integration and management of growth, ability to maintain Nasdaq listing, future financing needs, investment-management contract renewals, regulatory changes, cybersecurity incidents, economic and market downturns, leverage-related volatility, defaults by third-party investors, compliance failures and adverse investment performance.
  • The tax receivable agreement generally requires the company to pay the TWMH and TIG members 85% of certain net tax benefits generated by the business combination and future exchanges of interests.
  • Registration rights and lock-up provisions cover substantial holdings of common stock, warrants and securities exchangeable into common stock, with lock-up periods extending from one to three years for specified holders and securities.
  • Michael Tiedemann became Chief Executive Officer under a five-year employment term with a $600,000 annual base salary, potential bonuses and equity awards. Kevin Moran became Chief Operating Officer with a $375,000 annual base salary and severance provisions.

Most Important Facts for Investors to Verify

  1. Review the historical and pro forma financial statements in Exhibits 99.4 through 99.10 to assess revenue, profitability, cash flow, leverage, liquidity and the accounting impact of the transaction.
  2. Confirm the final amount drawn under the $100 million term loan and $150 million revolver, applicable interest rates, covenant thresholds and available borrowing capacity.
  3. Evaluate dilution from the PIPE bonus shares, warrants, Class B exchangeable interests, earn-out shares, the equity incentive plan and the employee stock purchase plan.
  4. Assess the economic impact of the 85% tax receivable agreement payments and other transaction-related obligations.
  5. Investigate remediation of the historical internal-control material weakness and the transition from Marcum to KPMG.
  6. Review the AHRA sale, promissory-note repayment terms and the company’s rights to reacquire AHRA.
  7. Consider lock-up expirations, registration rights and concentrated ownership, including significant holdings by IlWaddi Cayman Holdings, Global Goldfield Limited, the Sponsor and management.