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Aquarian Holdings is in late-stage talks with two large Middle Eastern investors to finance its takeover of Brighthouse Financial, one of the last large independent US insurers.
Aquarian, a private capital group with a speciality in managing insurance assets, is in advanced talks with Mubadala Capital, Qatar Investment Authority and other investors to raise more than $3bn in equity backing for a takeover of Brighthouse at a significant premium to its current trading price, two people briefed on the matter told the Financial Times.
Aquarian has been pursuing a takeover of Brighthouse for months with committed debt financing from banks led by Royal Bank of Canada, Nomura, and Société Générale, but it has been slower to arrange equity financing amid a lengthy diligence process, the people said.
Insurers have evolved into a cornerstone of funding for private capital groups, which rely on the steady flow of long-dated life insurance and annuities revenue to provide capital for their private credit lending operations.
Garnering equity backing is a final hurdle for Aquarian to proceed with a takeover offer of Brighthouse, which has nearly $120bn in assets. The company has languished on public markets for years and drew only tepid interest after it launched a sale process earlier this year led by Goldman Sachs and Wells Fargo.
Aquarian is planning to submit a final offer for Brighthouse as early as this week, one of the people said.
Brighthouse was spun out of MetLife in 2017 and is one of the biggest independent players in the life insurance market, after others such as American Equity Life, American National, Global Atlantic and Talcott Resolution merged into alternative asset managers.
It has a market capitalisation of $2.5bn, but has struggled to increase profits to reach its targeted capital ratios. The group’s focus on variable annuities, a complex product that is expensive to hedge and carries high capital charges, has weighed on its results in recent years and led to quarterly losses because of large accounting swings.
Many private capital groups studied takeover bids of Brighthouse, including Blackstone, Apollo and Carlyle, the Financial Times reported previously. But they dropped out of the process, with some losing interest as they conducted due diligence, people familiar with the talks previously said, leaving Aquarian as one of the few remaining interested buyers.
Aquarian is a New York-based asset manager run by Rudy Sahay, a former executive at Guggenheim Partners, and one of the pioneers in matching insurance assets with private investments such as securitised debt, leveraged loans and property.
Founded in 2017, the group manages more than $25bn in insurance-related assets and created Aquarian Insurance Holdings in March to manage its existing reinsurance and retail insurance businesses. It manages assets for relatively niche life and annuity insurers including Hudson Life, Somerset Reinsurance and Investors Heritage.
An acquisition of Brighthouse would increase Aquarian’s assets exponentially and propel it into one of the largest private capital groups.
It is already backed by Mubadala Capital, which last year contributed to a $1.5bn fundraising round to invest in private credit, insurance and real estate.
Aquarian, Mubadala and SocGen declined to comment. Brighthouse, QIA and RBC did not immediately respond to requests seeking comment. Nomura declined to comment.
