British Columbia Investment Management Corporation (BCI), a Canadian institutional investor, has struck an agreement with private investment firm Arctos Partners to sell its majority stake in Hayfin Capital Management, a European-focused alternative asset management firm.

Arctos, via its Keystone strategy, which provides strategic partnership to leading financial sponsors, through bespoke growth capital and liquidity solutions, has underwritten 100% of the funding and will facilitate the Hayfin team becoming the majority owners of the common equity.

Following the completion of the transaction, BCI will remain a significant and strategic limited partner in certain key Hayfin fund strategies, it was announced.

BCI acquired a majority stake in Hayfin in 2017, after identifying a compelling opportunity in the European market for private credit, driven by regulatory and structural demand trends.

During its ownership, BCI made significant strategic investments to support the continued growth of Hayfin’s strategies and worked with management to grow the investment teams and platform capabilities. Hayfin experienced strong sustained growth and momentum as a result, increasing assets under management from €8bn at the time of investment to over €31bn today.

Hayfin’s product offering spans direct lending, special situations, tactical solutions, high-yield/syndicated loans, healthcare opportunities, maritime yield and private equity solutions.

Overall, BCI’s investment is expected to generate a significant return on invested capital and a successful outcome for its pension plan and insurance fund clients, BCI stated.

Jim Pittman, executive vice-president and global head of private equity at BCI, said: “BCI’s successful private equity partnership with Hayfin’s management reflects our flexible, creative, and collaborative approach to investing. Given our long-term investment horizon, we were able to spot an emerging trend early on in the cycle – in this case the growth of the European private credit market – and help scale Hayfin into the market leader it is today.”

He noted that the partnership with Hayfin over the past seven years had “delivered significant growth in a critical period for the private credit market”.

“We remain confident in Hayfin, its management team, strategic vision and investment strategies and are pleased to remain as a significant limited partner in certain key funds,” Pittman continued.

Tim Flynn, co-founder and chief executive officer at Hayfin, said: “This is an exciting new chapter that will support Hayfin’s ongoing growth while preserving our core identity and operational autonomy.”

BCI’s private equity programme has a long-established presence in Europe through notable direct investments in multiple industry-leading companies such as BMS Group and ZEDRA, among others.

With a growing portfolio of companies and fund partners in Europe, BCI intends to continue accelerating the footprint of its private equity programme in this critical region, it added.

The transaction is subject to customary regulatory approvals and is anticipated to close in Q4 2024.

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