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Two Wall Street asset managers have emerged as the final bidders for Brighthouse Financial, a life insurance company considered the crown jewel of companies seeking to boost their profiles in the private credit industry.
According to those who were described on the issue, TPG and Aquarian Holdings, the asset managers supported by Mbadara Capital in Abu Dhabi, submitted an offer offered at a small premium to Brighthouse’s market value in the final round of their final bid earlier this month.
With assets of over $100 million and market value of over $3.5 billion, Brighthouse is one of the largest independent sellers of life insurance and pensions in the United States. Such insurers are coveted by asset managers to drive the growth of their credit investment platforms, as the premiums paid by their clients are ready for investment capital.
KKR, Brookfield and Apollo Global have cut off insurance companies over the past decade.
Private capital groups invest client funds in loans and support them in search of higher returns, rather than publicly traded securities.
The sale of Brighthouse, first reported by the Financial Times in January, attracted interest from many of the industry’s biggest players. According to those who described the issue, Blackstone, Apollo and Carlisle considered bidding, but ultimately dropped out of the process. Sixth Street bids on Brighthouse, but the offer did not move forward, the source said.
Some bidders lost interest in Brighthouse as they conducted due diligence on their balance sheets and pension portfolios, people explained the discussion.
Brighthouse struggles to increase its profits to reach targeted capital ratios. He previously told FT that it focused on variable pensions, a complex product that is expensive to hedge and has also eased interest in the acquisition.
Brighthouse owns legacy blocks of insurance contracts that overwhelm the overall value, despite selling new pensions that appeal to potential buyers, some said.
Still, this is one of the hundreds of millions of dollars insurers available to large credit companies seeking to grow their businesses.
One of the bidders could be invited to enter exclusive negotiations next week. Brighthouse could also choose not to sell the company if the bid is deemed too low, the two said. Meanwhile, several large rivals in the private capital industry, including Blackstone, Carlisle, Apollo Global and Six Street, either did not submit final bids or the offer did not move forward, six people explained the discussion.
Texas-based TPG, a publicly available private equity pioneer, does not own insurance operations. TPG may decide to sell a portion of the Brighthouse that it doesn’t want, the two said.
The bid for Aquarian, a New York asset manager founded by Guggenheim Partners veteran Rudy Sahay, was supported by a large sovereign wealth fund, including Mubadara, sources say.
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TPG, Aquarian, Brighthouse, Apollo, Blackstone, Carlyle, Sixth Street and Mubadala Capital declined to comment. Advisors Goldman Sachs and Wells Fargo also declined to comment.
If Brighthouse is sold to be agreed, it will join the wave of acquisitions of similar insurers. Sixth Street is working to close the acquisition of EnStar. Other large life insurance platforms, such as American Equity Life, American National, Global Atlantic and Talcott resolutions, are integrated into alternative asset managers.
Additional Reports by Lee Harris of London
