Under the terms of the deal, Aquarian will pay $70 per share for Brighthouse, which is 37% higher than the closing price on January 27, just before rumors of a possible sale surfaced.
Abu Dhabi-backed investment firm Aquarian Capital has made deals to buy Brighthouse Financial, a US life insurance annuities provider, for $4.1 billion.
The deal will conclude the long saga of uncertainty about the life insurance annuities provider’s future. The deal is an all-cash agreement. It is part of the Middle Eastern wealth and investment funds expanding into the American financial sector, as countries like Saudi Arabia are trying to diversify their economy beyond traditional oil as part of their Vision 2030.
Under the terms of the deal, Aquarian will pay $70 per share for Brighthouse, which is 37% higher than the closing price on January 27, just before rumors of a possible sale surfaced.
Brighthouse Financial is based in Charlotte, North Carolina. It has been exploring options, such as potentially selling its US life insurance and annuity business.
The company, which spun off from MetLife in 2017, is now attempting to make this potential sale with the help of investment bankers from Goldman Sachs and Wells Fargo, according to people familiar with the discussions but who wish to remain anonymous.
The shares of Brighthouse increased by 15% in early afternoon trading. It resulted in increasing the market capitalization of the company to about $3.5 billion, reaching its highest levels since February 2018. The stock price later increased to 26.7%, its highest level in eight years.
There has been a pattern of US life insurance and annuity providers attracting takeover interest due to their stable business models and reliable cash flows from premiums. During the sale process, companies such as Sixth Street, money manager TPG, and insurer Jackson Financial have made many offers, but Apollo Global Management chose not to participate in the bidding.
At one point, Brighthouse was negotiating with Sixth Street after talks with Aquarian Holdings stalled, according to three sources familiar with the matter. Discussions with Sixth Street and its insurance affiliate, Talcott, resumed after Brighthouse’s period of exclusive negotiations with Aquarian ended. Brighthouse’s board was reportedly dissatisfied with the funding structure in Aquarian’s final proposal. Aquarian, which focuses on insurance and asset management investments, is backed by Abu Dhabi’s state fund Mubadala and RedBird Capital Partners.
This acquisition positions Aquarian as a significant player in the annuity market, which may not have been as appealing to other bidders already active in the US industry, as per David Hitsky of L.E.K. Consulting. Aquarian is a holding company that invests in insurance and asset management businesses, backed by RedBird Capital Partners and Mubadala Capital, the investment arm of Abu Dhabi’s sovereign wealth fund, which led a consortium to acquire a majority stake in Fortress Investment Group last year.
In April, Mubadala Investment Company entered into a $1 billion partnership with Fortress Investment Group to invest in private credit. This partnership, announced on Thursday, will see Mubadala co-invest in Fortress’s private credit, asset-based lending, and real estate strategies. Fortress co-CEO Drew McKnight noted a growing demand from partners for customized, scalable investment solutions to boost returns in credit markets. He added that the partnership aims to broaden access to capital for borrowers by tapping into larger and more varied pools of investor funds.
Private credit has experienced significant growth recently, with major asset managers increasing their investments as regulatory changes make it more challenging for traditional banks to finance higher-risk loans. The deal concludes Brighthouse’s more than eight-year tenure as a publicly traded company since its spin-off from MetLife in 2017.