KAM manages assets for insurers, including Kuvare UK Holdings, which sells life insurance, annuities and reinsurance products. The deal will add up to $20 billion to Blue Owl's $165 billion of assets under management.
In the last several months, life insurers have been joining hands with private equity and investment companies. Allowing such companies to manage insurers' assets can help improve margins, said Nathan Viehl, partner at law firm Thompson Coburn.
The premiums that life insurers collect from policyholders can be a lucrative source of long-term capital for investment companies hunting for more assets to manage as the payouts on such policies are typically not due for years.
But analysts have warned that the risk-averse insurance industry could be exposed to some perils if its alliance with private equity companies remain unchecked.
"If private equity makes a push to loosen some of the regulations on insurers and insurers miscalculate their risk, they can all fall like dominoes," Viehl said.
Blue Owl's shares rose 6%. The company said it will finance the deal with $325 million of cash and $425 million of its shares.
The value of the deal could be bumped up by $250 million if certain revenue targets are met, Blue Owl said. It is also buying $250 million of preferred shares in Kuvare UK.
Blue Owl said the acquisition is expected to close in the second or third quarter of 2024.
Ardea Partners and PJT Partners were the lead financial advisers to Blue Owl. Kuvare UK was advised by Royal Bank of Canada, while J.P. Morgan Securities was the lead financial adviser to KAM.
(Reporting by Niket Nishant in Bengaluru; Editing by Arun Koyyur)
By Niket Nishant
