ORGANIZATION |
3 Months Ended |
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Mar. 31, 2025 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| ORGANIZATION | ORGANIZATION Bridge Investment Group Holdings Inc. (“we,” “us,” “our,” the “Company” or “Bridge”) is a leading alternative investment manager, diversified across specialized asset classes. Bridge combines its nationwide operating platform with dedicated teams of investment professionals focused on various specialized and synergistic investment platforms, including real estate, credit, renewable energy and secondaries strategies. Our broad range of products and vertically integrated structure allow us to capture new market opportunities and serve investors with various investment objectives. Our ability to scale our specialized and operationally driven investment approach across multiple attractive sectors within real estate equity and debt, in a way that creates sustainable and thriving communities, is the ethos of who we are and the growth engine of our success.
The Company’s principal asset is a controlling financial interest in Bridge Investment Group Holdings LLC (the “Operating Company”) through its ownership of the Operating Company’s Class A common units (“Class A Units”) and 100% of the Class B common units (“Class B Units”) (voting only). The Company acts as the sole managing member of the Operating Company and, as a result, indirectly operates and controls all of the Operating Company’s business and affairs and its direct and indirect subsidiaries. As a result, the Company consolidates the financial results of the Operating Company and reports non-controlling interests related to the Class A Units. The assets and liabilities of the Operating Company represent substantially all of the Company’s consolidated assets and liabilities, with the exception of certain deferred income taxes and payables due to affiliates pursuant to the Tax Receivable Agreement. Refer to Note 13, “Income Taxes,” for additional information. As of March 31, 2025, the Company held approximately 32% of the economic interest in the Operating Company. To the extent the Operating Company’s other members exchange their Class A Units into our Class A common stock in the future, the Company’s economic interest in the Operating Company will increase.
The Operating Company is the controlling entity, through its wholly owned subsidiary Bridge Fund Management Holdings LLC, of the following investment manager entities, which we refer to collectively as the Fund Managers: Bridge Multifamily Fund Manager LLC, Bridge Seniors Housing Fund Manager LLC (“BSHM”), Bridge Debt Strategies Fund Manager LLC, Bridge Office Fund Manager LLC (“BOFM”), Bridge Development Fund Manager LLC, Bridge Agency MBS Fund Manager LLC, Bridge Net Lease Fund Manager LLC, Bridge Logistics Properties Fund Manager LLC, Bridge Single-Family Rental Fund Manager LLC, Bridge Renewable Energy Fund Manager LLC and Newbury Partners-Bridge LLC (together, the “Fund Managers”). The Fund Managers provide investment advisory services to multiple investment funds and other vehicles, including joint ventures, separately managed accounts and privately offered limited partnerships, including any parallel investment vehicles and feeder funds (collectively, the “funds”). Certain Fund Managers also provide real estate services to applicable funds. The Operating Company is entitled to a pro rata portion of the management fees earned by the Fund Managers based on its ownership in the Fund Managers, which ranges from 60% to 100%.
Each time we establish a new fund, we establish a new general partner for that fund (each, a “General Partner” and collectively the “Bridge GPs”) controlled by the Operating Company and, in some cases, by senior management of the applicable vertical. Under the terms of the fund operating agreements, the General Partners are entitled to performance fees from the funds once certain threshold returns are achieved for the limited partners.
Reorganization in Connection with IPO
In connection with the initial public offering (“IPO”), the Company completed a series of organizational transactions (the “Transactions”). The Transactions included:
•The Operating Company amended and restated its existing limited liability company agreement to, among other things, (1) convert the Operating Company to a limited liability company organized under the laws of the State of Delaware, (2) change the name of the Operating Company from “Bridge Investment Group LLC” to “Bridge Investment Group Holdings LLC,” (3) convert all existing ownership interests in the Operating Company into 97,463,981 Class A Units and a like amount of Class B Units of the Operating Company and (4) appoint the Company as the sole managing member of the Operating Company upon its acquisition of Class A Units and Class B Units (“LLC Interests”);
•The Company amended and restated its certificate of incorporation to, among other things, provide for (1) the recapitalization of the Company’s outstanding shares of existing common stock into one share of our Class A common stock, (2) the authorization of additional shares of our Class A common stock, with each share of our Class A common stock entitling its holder to one vote per share on all matters presented to the Company’s stockholders generally and (3) the authorization of shares of our Class B common stock, with each share of our Class B common stock entitling its holder to ten votes per share on all matters presented to the Company’s stockholders generally, and that shares of our Class B common stock may only be held by such direct and indirect holders of Class A Units and our Class B common stock as may exchange at each of their respective options (subject in certain circumstances to time-based vesting requirements and certain other restrictions), in whole or in part from time to time, their Class A Units (along with an equal number of shares of our Class B common stock (and such shares shall be immediately cancelled)) for, at our election, cash or newly issued shares of our Class A common stock, and their respective permitted transferees (collectively, the “Continuing Equity Owners”);
•A series of transactions were effectuated such that, among other things, direct and indirect owners of interests in the Operating Company, various fund manager entities, and certain Bridge GPs (the “Contributed Bridge GPs”) contributed all or part of their respective interests to the Operating Company for shares of our Class B common stock and Class A Units, a portion of which were further contributed to the Company in exchange for shares of our Class A common stock; and
•The Company entered into (1) a stockholders agreement with certain of the Continuing Equity Owners (including each of our then executive officers), (2) a registration rights agreement with certain of the Continuing Equity Owners (including each of our then executive officers) and (3) a tax receivable agreement with the Operating Company and the Continuing Equity Owners, as amended and restated (the “Tax Receivable Agreement” or “TRA”).
Initial Public Offering
On July 20, 2021, the Company completed its IPO, in which it sold 18,750,000 shares of our Class A common stock at a public offering price of $16.00 per share receiving approximately $277.2 million in net proceeds, after deducting the underwriting discounts and commissions and estimated offering expenses. The net proceeds from the IPO were used to purchase 18,750,000 newly issued Class A Units from the Operating Company at a price per unit equal to the IPO price per share of our Class A common stock in the IPO, less the underwriting discounts and commissions and estimated offering expenses. The Operating Company used net proceeds from the public offering to pay approximately $139.9 million in cash to redeem certain of the Class A Units held directly or indirectly by certain of the owners of LLC Interests in the Operating Company, prior to the IPO (collectively, “Original Equity Owners”). Refer to Note 14, “Shareholders’ Equity,” for additional information.
In connection with the IPO, owners of the Contributed Bridge GPs contributed 24% to 40% of their interests in the respective Contributed Bridge GPs in exchange for LLC Interests in the Operating Company. Prior to the IPO, the Operating Company did not have any direct interest in the Contributed Bridge GPs. These combined financial statements prior to the IPO include 100% of the operations of the Contributed Bridge GPs for the periods presented on the basis of common control.
Subsequently, on August 12, 2021, the underwriters exercised their over-allotment option to purchase an additional 1,416,278 shares of our Class A common stock. The Company used 100% of the net proceeds of approximately $18.2 million, after taking into account the underwriting discounts and commissions and estimated offering expenses, to purchase 1,416,278 newly issued Class A Units directly from the Operating Company, at a price per Class A Unit equal to the IPO price per share of our Class A common stock in the IPO, less the underwriting discounts and commissions and estimated offering expenses payable by the Company. The Operating Company used all of the net proceeds from the sale of Class A Units to the Company related to this over-allotment option to redeem certain of the Class A Units held directly or indirectly by certain of the Original Equity Owners.
Prior to the IPO, the Operating Company and the then-existing Bridge GPs were under common control by the Original Equity Owners (the “Common Control Group”). The Original Equity Owners had the ability to control the Operating Company and each applicable Bridge GP and manage and operate these entities through the Fund Managers, a common board of directors, common ownership, and shared resources and facilities. The Operating Company and the then-existing Bridge GPs represented the predecessor history for the consolidated operations. As a result, the financial statements for the periods prior to the IPO are the combined financial statements of the Operating Company and the then-existing Bridge GPs, as applicable, as the predecessor to the Company for accounting and reporting purposes. We carried forward unchanged the value of the related assets and liabilities recognized in the Contributed Bridge GPs’ financial statements prior to the IPO into our financial statements. We have assessed the Contributed Bridge GPs for consolidation subsequent to the Transactions and IPO and have concluded that the Contributed Bridge GPs represent variable interests for which the Operating Company is the primary beneficiary. As a result, the Operating Company consolidates the Contributed Bridge GPs following the Transactions.
As part of the Transactions, the Operating Company acquired the non-controlling interest of its consolidated subsidiaries BSHM and BOFM, which was accounted for as an equity transaction with no gain or loss recognized in the combined statement of operations. The carrying amounts of the non-controlling interest in BSHM and BOFM were adjusted to zero.
Merger Agreement
On February 23, 2025, the Company entered into the Merger Agreement, pursuant to which, and on the terms and subject to the conditions thereof, Merger Sub Inc. will be merged with and into the Company, and with the Company surviving such merger as a wholly owned subsidiary of Apollo (the “Corporate Merger”), and Merger Sub LLC will be merged with and into the Operating Company with the Operating Company surviving such merger as a wholly-owned subsidiary of Apollo (the “LLC Merger” and, together with the Corporate Merger, the “Mergers”). Under the terms of the Merger Agreement, Apollo, through the Merger Subs, will acquire all of the Company’s outstanding stock (other than cancelled stock) and all of the Operating Company’s outstanding units (other than cancelled units) in an all-stock transaction with the total equity value of the transaction estimated to be approximately $1.5 billion. The Mergers are expected to close in the third quarter of 2025, subject to the satisfaction or waiver of all of the conditions to the Mergers.
On the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Corporate Merger (the “Corporate Merger Effective Time”), (i) each share of Class A common stock issued and outstanding immediately prior to the Effective Time shall, by virtue of the Corporate Merger and without any action on the part of the holder thereof, (excluding any shares owned directly by Apollo, Merger Sub Inc. or any of their subsidiaries immediately prior to the Corporate Merger Effective Time or that the Company holds in treasury) be cancelled and extinguished and automatically converted into and shall thereafter represent the right to receive a number of validly issued, fully paid and nonassessable shares of Apollo common stock equal to 0.07081 (the “Class A Exchange Ratio”) and cash in lieu of fractional shares, if any, in each case, in accordance with the procedures set forth in the Merger Agreement and without interest (the “Class A Corporate Merger Consideration”), (ii) each share of Class B common stock issued and outstanding immediately prior to the Corporate Merger Effective Time, shall by virtue of the Corporate Merger and without any action on the part of the holder of thereof, (excluding any shares owned directly by Apollo, Merger Sub Inc. or any of their subsidiaries immediately prior to the Corporate Merger Effective Time or that the Company holds in treasury) be cancelled and extinguished and automatically converted into and shall thereafter represent the right to receive a number of validly issued, fully paid and nonassessable shares of Apollo common stock equal to 0.00006 (subject to such adjustments as may be required to ensure that the value of consideration received for the Class B common stock at the Corporate Merger Effective Time in respect of one share of Class B common stock does not exceed $0.01), and cash in lieu of fractional shares, if any, in each case, in accordance with the procedures set forth in the Merger Agreement and without interest (the “Class B Corporate Merger Consideration,” and together with the Class A Corporate Merger Consideration, the “Corporate Merger Consideration”), and (iii) each issued and outstanding share of common stock, par value $0.01 per share, of Merger Sub Inc. issued and outstanding immediately prior to the Corporate Merger Effective Time shall be converted into and become one fully paid and non-assessable share of common stock, par value $0.01 per share, of the Company, in its capacity as the corporation surviving the Corporate Merger (the “Surviving Corporation”).
On the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the LLC Merger (the “LLC Merger Effective Time”), (i) each Class A Unit issued and outstanding immediately prior to the LLC Merger Effective Time shall, by virtue of the LLC Merger and without any action on the part of the holder thereof, (excluding any LLC Interests that are owned directly by Apollo, Merger Sub LLC or any of their subsidiaries, LLC Interests that are held in treasury of the Operating Company immediately prior to the LLC Merger Effective Time, Class A Units that we own directly and Class A Units that are exchanged into shares of Class A common stock as permitted by the Merger Agreement and the operating agreement of the Operating Company) be cancelled and extinguished and automatically converted into and shall thereafter represent the right to receive that number of validly issued, fully paid and nonassessable shares of Apollo common stock equal to the Class A Exchange Ratio and cash in lieu of fractional shares, if any, in each case, in accordance with the procedures set forth in the Merger Agreement and without interest, (ii) each Class B Unit issued and outstanding immediately prior to the LLC Merger Effective Time shall, by virtue of the LLC Merger, and without any action on the part of the holder thereof, be cancelled and retired without any conversion thereof and shall cease to exist and no payment shall be made in respect thereof and (iii) each Class A Unit that we own directly shall be unaffected by the LLC Merger and shall remain outstanding as Class A Units of the Operating Company, in its capacity as the company surviving the LLC Merger (the “Surviving LLC”) held by the Company.
On the terms and subject to the conditions set forth in the Merger Agreement, effective as of immediately prior to the Corporate Merger Effective Time, automatically and without any action on the part of the holders thereof or the Company or its subsidiaries, (i) each RSU award that is outstanding and unvested as of immediately prior to the Effective Time shall be converted into a number of restricted stock units of Apollo with respect to shares of Apollo common stock (rounded down to the nearest whole share of Apollo common stock), subject to the same terms and conditions as were applicable to such RSU award immediately prior to the Corporate Merger Effective Time, equal to (x) the Class A Exchange Ratio multiplied by (y) the number of shares of Company Class A Common Stock subject to such RSU Award immediately prior to the Corporate Merger Effective Time, and (ii) each Restricted Stock award (or portion thereof) that is outstanding and unvested as of immediately prior to the Effective Time shall be converted into an award of restricted shares of Apollo common stock (rounded down to the nearest whole share of Apollo common stock), subject to the same terms and conditions as were applicable to such Restricted Stock Award immediately prior to the Corporate Merger Effective Time, equal to (x) the Class A Exchange Ratio multiplied by (y) the number of shares of Class A common stock subject to such Restricted Stock Award immediately prior to the Effective Time, and cash in lieu of fractional shares of Apollo common stock, if any, in each case, in accordance with the procedures set forth in the Merger Agreement and without interest; provided, that, outstanding and unvested Restricted Stock Awards that are held by non-employee directors of the Company shall become fully vested as of immediately prior to the Effective Time and shall be converted into the right to receive the Corporate Merger Consideration as provided in the Merger Agreement.
On the terms and subject to the conditions set forth in the Merger Agreement, effective as of immediately prior to the LLC Merger Effective Time, automatically and without any action on the part of the holder thereof or the Company or its subsidiaries, each award of Class A Units (“OpCo Class A Award”) that is outstanding and unvested as of immediately prior to the LLC Merger Effective Time shall be converted into an award of restricted shares of Apollo common stock (rounded down to the nearest whole share of Apollo common stock), subject to the same terms and conditions as were applicable to such unvested OpCo Class A Award immediately prior to the LLC Merger Effective Time, equal to (i) the Class A Exchange Ratio multiplied by (ii) the number of shares of Class A Units subject to such OpCo Class A Award immediately prior to the LLC Merger Effective Time, and cash in lieu of fractional shares of Apollo common stock, if any, in each case, in accordance with the procedures set forth in the Merger Agreement and without interest.
The consummation of the Mergers is subject to certain closing conditions customary for a transaction of this type, as set forth in the Merger Agreement, including, among other things, (i) approval by the affirmative vote of the holders representing at least a majority of the aggregate voting power of the outstanding shares of Class A common stock and Class B common stock entitled to vote in accordance with the General Corporation Law of the State of Delaware, voting together, (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the accuracy of each party’s representations and warranties (subject to customary materiality qualifiers), (iv) each party’s compliance with its covenants and agreements contained in the Merger Agreement in all material respects, (v) the revenue run-rate for all of our clients (other than non-consenting clients) being at least 85% of the revenue run-rate for all of our clients as of December 31, 2024, (vi) certain pre-closing restructuring activities having been completed, (vii) the effectiveness of the registration statement to be filed by Apollo with the SEC pursuant to the Merger Agreement, (viii) the approval for listing on the New York Stock Exchange of the shares of the Apollo common stock to be issued as merger consideration in connection with the Mergers, subject to official notice of issuance, (ix) the Second A&R Tax Receivable Agreement (the “Second A&R TRA”) remaining in full force and effect, and (x) other customary conditions specified in the Merger Agreement. The Merger Agreement also contains certain customary termination rights in favor of us and Apollo. If the Merger Agreement is terminated under specified circumstances, we will be required to pay Apollo a termination fee of $45.0 million.
Certain members of our management and their affiliates, collectively owning approximately 51.4% of the outstanding voting power of our Class A common stock and Class B common stock, have entered into voting agreements in connection with the transaction and have agreed to vote in favor of the transaction in accordance with the terms therein.
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