Bermudian insurer Assured Guaranty has agreed to acquire all of the outstanding equity interests in BlueMountain Capital Management and its associated entities for $160m.

As per the agreement, Assured Guaranty US Holdings, a subsidiary of Assured Guaranty, will carry out the acquisition.

BlueMountain operates an alternative asset management firm with $19.3bn in assets under management (AUM).

Of total $160m, the cash component of deal is around $114.8m while the remaining price is payable, in cash, its common shares, a one-year promissory note, or in a combination of the foregoing as opted by at Assured Guaranty.

BlueMountain co-founder, CEO and CIO Andrew Feldstein will join Assured Guaranty as CIO and head of asset management, which will include his current roles at BlueMountain.

Assured Guaranty President and CEO Dominic Frederico said: “BlueMountain will be our largest and most important investment outside the financial guaranty sector. We expect to allocate a portion of our financial guaranty subsidiaries’ investment portfolios to be managed by our new asset management platform and believe that will drive improvement in our overall investment returns, which should raise the future level of insurance subsidiary permitted dividends.

“The acquisition is consistent with our strategic objective to diversify into fee-based revenue sources, and we expect this platform to be the basis for further development of our presence in the asset management sector. We are delighted that Andrew Feldstein will join Assured Guaranty to execute this strategy.”

Assured Guaranty US Holdings plans to fund the deal with loans from its financial guaranty subsidiaries Assured Guaranty Municipal, Municipal Assurance, and Assured Guaranty Corp.

Subject to regulatory approval and certain customary closing conditions, the transaction is likely to be completed in the fourth quarter of this year.