Blue Owl Capital to acquire Kuvare Asset Management for $750 million

Blue Owl Capital has outlined plans to acquire Kuvare Asset Management (KAM) in a $750 million deal.

KAM specialises in managing assets for insurers, including Kuvare UK Holdings, which offers life insurance, annuities, and reinsurance products. 

Blue Owl aims to expand its assets under management by up to $20 billion through this acquisition, thereby enhancing its current portfolio.

The partnership between life insurers and investment firms has gained momentum in recent months, with such alliances seen as a means to potentially improve margins for insurers.

Nathan Viehl, a partner at Thompson Coburn, suggests that the premiums collected by life insurers serve as a stable source of long-term capital for investment firms.

However, analysts caution that the insurance industry's traditionally risk-averse nature could pose challenges if not carefully managed. 

There are concerns that relaxing regulations on insurers, coupled with underestimating risk exposure, could lead to unforeseen consequences.

In response to the announcement, Blue Owl's shares surged by 6 per cent. The financing of the acquisition will involve $325 million in cash and $425 million in Blue Owl shares. 

Additionally, the deal's value could see a further increase of $250 million contingent on specific revenue targets being met. Blue Owl also plans to acquire $250 million worth of preferred shares in Kuvare UK.

The acquisition is expected to be finalised in the second or third quarter of 2024. 

Leading financial advisers for Blue Owl included Ardea Partners and PJT Partners, while Kuvare UK received advice from Royal Bank of Canada. JP Morgan Securities served as the lead financial adviser to KAM.

(With Reuters Inputs)