Noncontrolling Interests

12 Months Ended

Dec. 31, 2019

Noncontrolling Interest [Abstract]

Noncontrolling Interests

NONCONTROLLING INTERESTS

Noncontrolling interests represent ownership interests in the Company’s subsidiaries held by parties other than the Company, and primarily relate to the Group A Units held by executive managing directors.

Prior to the Recapitalization, the attribution of net income (loss) of each Sculptor Operating Partnership was based on the relative ownership percentages of the Group A Units (noncontrolling interests) and the Group B Units (indirectly held by the Registrant). In applying the substantive profit-sharing arrangements in the Sculptor Operating Partnerships limited partnership agreements to the Company’s consolidated financial statements, for periods subsequent to the Recapitalization and for the duration of the Distribution Holiday, the Company will allocate net income of each Sculptor Operating Partnership in any fiscal year solely to the Group B Units and any net loss on a pro rata basis based on the relative ownership percentages of the Group A Units and Group B Units. To the extent a Sculptor Operating Partnership incurs a net loss in an interim period, any net income recognized in a subsequent interim period in the same fiscal year is allocated on a pro rata basis to the extent of previously allocated net loss. Conversely, to the extent a Sculptor Operating Partnership recognizes net income in an interim period, any net loss incurred in a subsequent interim period in the same fiscal year is allocated solely to the Group B Units to the extent of previously allocated net income.

The table below sets forth the calculation of noncontrolling interests related to the Group A Units for each Sculptor Operating Partnership (rounding differences may occur). The blended participation percentages presented below take into account ownership changes throughout the periods presented. In addition, the blended participation percentages in 2019 take into account the difference in methodology described above for the period prior to the Recapitalization Date compared to the period following the Recapitalization Date. For example, Sculptor Capital Advisors LP had net income in the period prior to the Recapitalization Date, and as a result, allocates a portion of its net income for the year ended December 31, 2019 to the Group A Units.

	Year Ended December 31,
	2019			2018			2017
	(dollars in thousands)
Sculptor Capital LP
Net (loss)	$	(101,557)		$	(80,279)		$	(37,353)
Blended participation percentage	43		%	57		%	58		%
Net (Loss) Attributable to Group A Units	$	(43,612)		$	(45,833)		$	(21,765)
Sculptor Capital Advisors LP
Net income	$	37,667		$	17,379		$	89,395
Blended participation percentage	18		%	56		%	59		%
Net Income Attributable to Group A Units	$	6,695		$	9,670		$	52,344
Sculptor Capital Advisors II LP
Net income	$	56,953		$	18,510		$	170,668
Blended participation percentage	0		%	56		%	59		%
Net Income Attributable to Group A Units	$	—		$	10,447		$	100,151
Total Sculptor Operating Group
Net (loss) income	$	(6,937)		$	(44,390)		$	222,710
Blended participation percentage	n/m			58		%	59		%
Net (Loss) Income Attributable to Group A Units	$	(36,917)		$	(25,716)		$	130,730

_______________

n/m not meaningful

The following table presents the components of the net (loss) income attributable to noncontrolling interests:

	Year Ended December 31,
	2019		2018		2017
	(dollars in thousands)
Group A Units	$	(36,917)	$	(25,716)	$	130,730
Other	733		807		900
	$	(36,184)	$	(24,909)	$	131,630

The following table presents the components of the shareholders’ equity attributable to noncontrolling interests:

	December 31, 2019		December 31, 2018
	(dollars in thousands)
Group A Units	$	434,943	$	415,928
Other	5,836		3,503
	$	440,779	$	419,431

The Preferred Units and fund investors’ interests in certain consolidated funds are redeemable outside of the Company’s control. These interests are classified within redeemable noncontrolling interests in the consolidated balance sheets. The following tables present the activity in redeemable noncontrolling interests:

	Year Ended December 31,
	2019						2018						2017
	Funds		Preferred Units		Total		Funds		Preferred Units		Total		Funds		Preferred Units		Total
	(dollars in thousands)
Beginning balance	$	157,660	$	420,000	$	577,660	$	25,617	$	420,000	$	445,617	$	21,621	$	262,500	$	284,121
Fair value of Debt Securities exchanged for 2016 Preferred Units	—		(167,799)		(167,799)		—		—		—		—		—		—
Fair value of 2019 Preferred Units exchanged for 2016 Preferred Units	—		(137,759)		(137,759)		—		—		—		—		—		—
Issuance of 2019 Preferred Units, net of issuance costs	—		136,964		136,964		—		—		—		—		—		—
Preferred Units issuance, net of issuance costs	—		—		—		—		—		—		—		150,054		150,054
Change in redemption value of Preferred Units	—		(101,406)		(101,406)		—		—		—		—		7,446		7,446
Capital contributions	3,747		—		3,747		147,217		—		147,217		2,329		—		2,329
Capital distributions	(126,778)		—		(126,778)		(15,465)		—		(15,465)		—		—		—
Funds deconsolidation	(43,374)		—		(43,374)		—		—		—		—		—		—
Comprehensive income	8,745		—		8,745		291		—		291		1,667		—		1,667
Ending Balance	$	—	$	150,000	$	150,000	$	157,660	$	420,000	$	577,660	$	25,617	$	420,000	$	445,617

Relinquishment of Group A Units

Sculptor Corp and Och-Ziff Holdings LLC., as the general partners of the Sculptor Operating Partnerships (collectively, the “General Partners”), entered into a Relinquishment Agreement with Daniel S. Och and certain family trusts over which Mr. Och has investment control (the “Och Trusts”) effective as of March 1, 2017 (the “Relinquishment Agreement”). Pursuant to the Relinquishment Agreement, Mr. Och and the Och Trusts agreed to cancel, in the aggregate, 3.0 million of their vested Group A Units. The Company accounted for the transaction as a repurchase of Group A Units for no consideration. A corresponding number of Class B Shares were also canceled.

The Relinquishment Agreement provides that if any of the Group D Units granted to James S. Levin on March 1, 2017 are forfeited, such forfeited units (up to an aggregate amount of 3.0 million) shall be reallocated to Mr. Och and the Och Trusts pursuant to the terms of the Sculptor Operating Partnerships’ limited partnership agreements; however, in February 2018, Mr. Och announced that he is disclaiming his right to receive any forfeited units and instead the Group D Units forfeited by James S. Levin have been canceled.

In the third quarter of 2018, a former executive managing director of the Company relinquished 350,000 Group A Units and an equal number of Class B Shares.

Dilution of Proceeds from Tax Receivable Agreement Amendment

In September 2016, the Company amended the tax receivable agreement to provide that no amounts will be due or payable under the tax receivable agreement by Sculptor Corp, one of the Company’s wholly owned intermediate holding companies, with respect to the 2015 and 2016 taxable years. During the first quarter of 2017, Sculptor Corp contributed to the Sculptor Operating Group the cash previously set aside for such payments, which resulted in a reallocation of such contribution between the Company’s paid-in capital and the paid-in capital of the Group A Units (included within noncontrolling interests).