Alternative asset manager Blue Owl Capital announced it has entered into a definitive purchase agreement to acquire Kuvare Insurance Services LP (KAM) for $750 million. KAM is a boutique investment management firm that provides asset management services to the insurance industry, including Kuvare UK Holdings.
Blue Owl will fund the KAM acquisition through a combination of $325 million in cash and $425 million in Blue Owl Class A common stock. And the KAM acquisition is expected to close in the second or third quarter of 2024 and remains subject to customary regulatory approvals, other closing conditions, and specified termination rights. Upon the closing of the KAM acquisition, most KAM employees are expected to join Blue Owl. Plus, there is potential for up to a $250 million earnout subject to certain adjustments and achievements of future revenue targets.
Blue Owl also made a long-term investment in Kuvare, purchasing $250 million of preferred equity. This funding creates long-term alignment between Blue Owl and Kuvare and provides valuable growth capital to Kuvare’s insurance companies, each of which will become new asset management clients of Blue Owl.
Launched in 2015, Kuvare is a technology-enabled financial services firm operating several insurance and reinsurance businesses and has become a top 20 fixed and indexed annuity writer in the United States. Kuvare’s business segments include retail, institutional reinsurance, and specialty insurance advisory services.
Along with the preferred equity investment, Blue Owl and Kuvare entered into investment management agreements (IMAs) that will enable Blue Owl to deploy up to $3 billion of assets across its existing Credit, GP Strategic Capital and Real Estate investment platforms, which can grow over time. Upon closing the acquisition, Blue Owl will be allocated up to $20 billion of AUM in aggregate. Kuvare will continue managing the overall asset allocations for its insurance businesses and strategic investments. Blue Owl’s IMAs with Kuvare insurance companies will be additive to Blue Owl’s permanent capital base while enhancing Kuvare’s investment capabilities.
These deals are expected to be accretive to Blue Owl in 2024.
Ardea Partners LP and PJT Partners LP serve as lead financial advisors to Blue Owl in connection with the transactions. And BofA Securities, BMO Capital Markets, Deutsche Bank Securities, Goldman Sachs, Mizuho and its affiliate Greenhill & Co, Morgan Stanley, and Truist Securities are also co-financial advisors to Blue Owl. Kirkland & Ellis LLP acted as a legal advisor to Blue Owl.
J.P. Morgan Securities is acting as lead financial advisor to KAM, and as co-placement agent on the investment in Kuvare. And RBC is acting as financial advisor to Kuvare and as co-placement agent on the investment in Kuvare. Sidley Austin LLP acted as legal advisor to Kuvare.
KEY QUOTES:
“The creation of Blue Owl Insurance Solutions represents a significant moment in Blue Owl’s journey. Our acquisition of KAM allows us to provide broader solutions to the multi-trillion-dollar insurance market at scale. KAM’s capabilities in investment grade credit and real estate strategies supplement Blue Owl’s existing strength in these asset classes and further accelerate our ability to bring differentiated products and strategies to the market for Kuvare and third-party insurance clients.”
– Doug Ostrover, Co-CEO of Blue Owl
“Our preferred equity investment in Kuvare reflects our confidence in the growth trajectory of the business; both through its extensive distribution network and proven reinsurance strategy. This partnership with Kuvare anchors Blue Owl’s expanding presence in the insurance channel, greatly complementing our robust institutional and wealth footprint and further diversifying the markets for which we provide investment solutions. In aggregate, we believe these transactions reflect a creative approach to expanding our offerings for the insurance market at an attractive price.”
– Marc Lipschultz, Co-CEO of Blue Owl
“It is an important and exciting step in the evolution of Kuvare to associate in such an impactful way with an asset manager of Blue Owl’s caliber. We always strive to be excellent stewards of assets entrusted to us by our policyholders and reinsurance partners, and the team at Blue Owl has demonstrated a unique commitment to helping us achieve our goals. We especially look forward to continued collaboration with our many valued KAM colleagues who will join the Blue Owl team at the close of this transaction.”
– Dhiren Jhaveri, Founder, Chairman and CEO of Kuvare
