Hedge fund Sculptor agrees $639mn takeover by Rithm Capital

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Sculptor Capital Management, once one of the world’s largest hedge funds, has agreed to be sold for $639mn in a takeover that ends a bitter fight between its billionaire founder Daniel Och and his former protégé Jimmy Levin.

New York-based real estate firm Rithm Capital will pay Sculptor shareholders $11.15 per class A share, an 18 per cent premium to the fund’s closing price on Friday. Sculptor’s stock price was up 15 per cent in early Wall Street trading on Monday following the deal’s announcement. 

The sale price represents a fraction of the $12bn valuation Och-Ziff Capital Management — as Sculptor was called at the time — listed its shares at in 2007. The firm’s stock price has since collapsed more than 90 per cent.

Sculptor last year became embroiled in a legal battle with Och, who handed over the reins to the firm in 2018, over Levin’s lucrative compensation agreement. The firm’s founder questioned why the board had agreed to grant the chief executive more than $145mn in pay in 2021 despite “a period of less than mediocre performance”.

Och’s lawsuit alleged that the payout disadvantaged public stockholders including himself. A director nominated to the Sculptor board by Och resigned last year in protest.

The legal battle brought into the open a long-simmering dispute between Och and Levin, who first met when the latter taught Och’s son how to water ski. He joined the firm in 2006 as an analyst and quickly rose up the ranks to become chief investment officer in 2017 with a $280mn pay package that set him apart from many of his peers. 

However, the relationship appeared to sour and Och picked former Credit Suisse executive Robert Shafir to take over from him. Och remains a large minority shareholder and investor in Sculptor’s private funds.

Sculptor and Och settled late last year as the hedge fund, which manages $34bn in assets, launched a sale process using a special board committee that included Och. That board committee on Monday unanimously agreed to sell Sculptor.

The fund will be held as an independent subsidiary of Rithm Capital, with its management and investment staff remaining in place, the companies said on Monday. Levin will continue to lead Sculptor’s investment operations and report to Rithm’s chief executive Michael Nierenberg.

Levin stands to make more than $40mn from Monday’s sale, according to securities filings, adding to the hundreds of millions he has made at the fund. Levin currently owns more than 14mn Sculptor shares worth about $150mn, according to securities filings.

The New York-based firm, then known as Och-Ziff, had several controversies during Och’s leadership, most notably in 2016 when it paid $413mn to US authorities to settle bribery charges. It was accused of paying bribes in at least five African countries — including top officials of Muammar Gaddafi’s regime in Libya and the Democratic Republic of Congo — to win business. It rebranded to Sculptor in 2019.

Sculptor did not immediately respond to a request for comment.