Sun Life Financial plans to buy a 51% majority stake in alternative credit investment manager Crescent Capital for up to $338 million.
Canadian insurer Sun Life (SLF) will make an upfront payment of $276 million and a future payment of up to $62 million based on the achievement of certain milestones. In addition, Sun Life has committed to co-invest up to $750 million in Crescent’s investment strategies, to fund the launch of new products and create alignment with Crescent’s investors.
As part of the deal, Crescent will be integrated into SLC Management, Sun Life’s alternatives asset management business. As a result, the acquisition will broaden SLC Management’s alternative offerings to meet the growing needs of institutional clients, who are allocating more capital to alternative credit in search of yield.
Founded in 1991, Crescent is a leading investor in mezzanine debt, middle market direct lending in the US and Europe, high-yield bonds and broadly syndicated loans.
“We’ve been looking to expand our alternative credit capabilities for some time now, offering our clients a broader, deeper array of investment solutions across the public and private credit markets, infrastructure, real estate equity and debt,” said SLC Management President Steve Peacher.
As of June 30, Sun Life had $1,122 billion in total assets under management. Crescent has about $28 billion in assets under management. Headquartered in Los Angeles with offices in New York, Boston and London, Crescent has more than 180 partners and employees.
As part of the transaction, Crescent’s equity holders will retain carried interests in existing funds along with certain assets and their respective economics. The transaction has a put / call option that will allow the transfer of remaining interests approximately 5 years from closing, which is expected later this year.
Shares in SLF have dropped about 9% so far this year as Wall Street analysts have a cautiously optimistic outlook on the stock. The Moderate Buy consensus breaks down into 5 Buys, 4 Holds and 1 Sell. (See SLF stock analysis on TipRanks)
That’s with a $44.92 average analyst price target indicating 7.9% upside potential lies ahead over the coming year.
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