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Two Wall Avenue asset managers have emerged as closing bidders for Brighthouse Monetary, a life insurer considered as a crown jewel for companies seeking to increase their profiles within the non-public credit score business.
TPG and Aquarian Holdings, an asset supervisor backed by Abu Dhabi’s Mubadala Capital, each submitted provides at a small premium to Brighthouse’s market worth within the closing spherical of bidding earlier this month, in line with individuals briefed on the matter.
Brighthouse, with greater than $100bn in belongings and a $3.5bn-plus market worth, is without doubt one of the largest remaining unbiased sellers of life insurance coverage and annuities within the US. Such insurers are coveted by asset managers to gas the expansion of their credit score funding platforms, as a result of the premiums paid by their prospects present a prepared supply of funding capital.
KKR, Brookfield, Apollo International and others have snapped up insurers over the previous decade.
Non-public capital teams make investments consumer funds into loans, favouring them over publicly traded securities, in the hunt for increased returns.
The sale of Brighthouse, first reported by the Monetary Occasions in January, drew curiosity from most of the business’s greatest gamers. Blackstone, Apollo and Carlyle weighed bids, however finally dropped out of the method, in line with individuals briefed on the matter. Sixth Avenue did bid for Brighthouse, however its supply didn’t advance, mentioned the sources.
Some potential bidders misplaced curiosity in Brighthouse as they carried out due diligence into its stability sheet and annuities portfolio, mentioned individuals briefed on the talks.
Brighthouse has struggled to extend earnings to achieve its focused capital ratios. Its concentrate on variable annuities, a fancy product that’s costly to hedge and carries excessive capital expenses, additionally tempered takeover curiosity, some sources beforehand advised the FT.
Brighthouse holds legacy blocks of insurance coverage contracts which have crimped its general worth, even because it sells new annuities that attraction to potential consumers, a number of the individuals mentioned.
Nonetheless, it is without doubt one of the few multibillion-dollar insurers out there for a big credit score agency seeking to additional develop its enterprise.
One of many bidders is more likely to be invited to enter unique negotiations within the subsequent week. Brighthouse might additionally decide to not promote the corporate if the bids had been deemed too low, two individuals mentioned. In the meantime, a number of bigger rivals within the non-public capital business together with Blackstone, Carlyle, Apollo International and Sixth Avenue both didn’t submit closing bids or didn’t see their provides advance, mentioned six individuals briefed on the talks.
Texas-based TPG, a publicly traded non-public fairness pioneer, doesn’t personal an insurance coverage operation. TPG may determine to divest elements of Brighthouse it doesn’t need, two individuals mentioned.
The bid by Aquarian, a New York asset supervisor based by Guggenheim Companions veteran Rudy Sahay, was backed by giant sovereign wealth funds, together with Mubadala, the sources mentioned.
TPG, Aquarian, Brighthouse, Apollo, Blackstone, Carlyle, Sixth Avenue and Mubadala Capital declined to remark. Advisers Goldman Sachs and Wells Fargo additionally declined to remark.
Had been a sale of Brighthouse to be agreed, it might be a part of a wave of takeovers of comparable insurers. Sixth Avenue is working to shut its acquisition of Enstar. Different giant life insurance coverage platforms, together with American Fairness Life, American Nationwide, International Atlantic and Talcott Decision have merged into different asset managers.
Extra reporting by Lee Harris in London
