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Blue Owl (OWL) to Buy KAM & Launch Insurance Solutions Business
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Blue Owl Capital Inc. (OWL - Free Report) has signed an agreement to acquire Kuvare Insurance Services LP doing business as Kuvare Asset Management (“KAM”) for $750 million. The transaction, expected to close in the second or third quarter of 2024, will likely be accretive to the company’s financials this year and is subject to regulatory approvals and other closing conditions.
Shares of OWL gained 4.7% in response to the announcement of this news.
KAM is a boutique investment firm focused on catering to the asset management requirements of the insurance industry, including Kuvare UK Holdings (“Kuvare”). The majority of KAM employees are expected to join OWL upon the completion of the deal. Kuvare operates in several insurance and reinsurance businesses and is one of the top 20 fixed and indexed annuity writers in the United States.
The deal will add approximately $20 billion of assets under management (AUM) to Blue Owl Capital. As of Dec 31, 2023, the company had $165.7 billion in AUM.
The consideration for the acquisition will include $325 million in cash and $425 million worth of Blue Owl Capital’s Class A common stock. Further, a potential earnout of up to $250 million is part of the agreement, subject to specific adjustments and achievement of revenue targets. This will be payable between 2026 and 2028.
Apart from this, the company purchased $250 million of preferred equity in Kuvare as part of the long-term investment in the latter. This will support business growth initiatives in Kuvare.
Moreover, OWL will launch Blue Owl Insurance Solutions through this acquisition. It offers partnerships to insurance firms generating lucrative returns and alpha in a risk-based framework. This will supplement the company’s scaled institutional and Private Wealth capital-raising channels. KAM’s expertise will expand the existing offerings for insurance firms through the addition of various instruments, including Private and Public ABS, CLOs, Commercial Real Estate and Investment Grade Private Credit.
Doug Ostrover, Co-CEO of Blue Owl Capital, said, “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.”
Further, OWL and Kuvare jointly entered into investment management agreements (IMAs). This will enable the company to allocate up to $3 billion of assets across varied platforms including Credit, GP Strategic Capital and Real Estate investment.
Kuvare will carry on the management of overall asset allocations of its insurance businesses and strategic investments. OWL’s IMAs with Kuvare are anticipated to be accretive to its permanent capital base.
Marc Lipschultz, Co-CEO of Blue Owl Capital, said, “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.”
The deal is expected to strengthen the OWL’s capital base, diversify revenues and broaden asset management capabilities.
Over the past six months, shares of Blue Owl Capital have jumped 51.3% compared with the industry’s 33.5% growth.
Other Financial Services Firms Taking Similar Steps
Last Month, Stifel Financial Corp. (SF - Free Report) announced its plan to acquire Finance 500, Inc. and CB Resource, Inc., market leaders in the underwriting and issuance of certificates of deposits (CD). The terms of the deal remain undisclosed.
The deal is expected to enhance and deepen SF’s CD funding offerings with market-leading CD underwriting, tech-enabled risk management and strategic planning capabilities. This aligns with the company’s efforts to expand its existing private client network and deposit base, which is the primary funding source, through expansion.
This February, Blackstone Inc. (BX - Free Report) announced the acquisition of $1.1 billion in credit card receivable from Barclays PLC (BCS - Free Report) for its Credit & Insurance segment. The transaction, subject to specific conditions, was funded during the first quarter of 2024.
This move is expected to enhance BX’s partnership with BCS, thus strengthening its institutional client base with deepened relationships. Under the terms of the deal, Barclays will enter into long-term strategic forward flow sale and service arrangements with BX related to the accounts. Blackstone’s investment will be made entirely on behalf of the firm’s insurance clients.
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Blue Owl (OWL) to Buy KAM & Launch Insurance Solutions Business
Blue Owl Capital Inc. (OWL - Free Report) has signed an agreement to acquire Kuvare Insurance Services LP doing business as Kuvare Asset Management (“KAM”) for $750 million. The transaction, expected to close in the second or third quarter of 2024, will likely be accretive to the company’s financials this year and is subject to regulatory approvals and other closing conditions.
Shares of OWL gained 4.7% in response to the announcement of this news.
KAM is a boutique investment firm focused on catering to the asset management requirements of the insurance industry, including Kuvare UK Holdings (“Kuvare”). The majority of KAM employees are expected to join OWL upon the completion of the deal. Kuvare operates in several insurance and reinsurance businesses and is one of the top 20 fixed and indexed annuity writers in the United States.
The deal will add approximately $20 billion of assets under management (AUM) to Blue Owl Capital. As of Dec 31, 2023, the company had $165.7 billion in AUM.
The consideration for the acquisition will include $325 million in cash and $425 million worth of Blue Owl Capital’s Class A common stock. Further, a potential earnout of up to $250 million is part of the agreement, subject to specific adjustments and achievement of revenue targets. This will be payable between 2026 and 2028.
Apart from this, the company purchased $250 million of preferred equity in Kuvare as part of the long-term investment in the latter. This will support business growth initiatives in Kuvare.
Moreover, OWL will launch Blue Owl Insurance Solutions through this acquisition. It offers partnerships to insurance firms generating lucrative returns and alpha in a risk-based framework. This will supplement the company’s scaled institutional and Private Wealth capital-raising channels. KAM’s expertise will expand the existing offerings for insurance firms through the addition of various instruments, including Private and Public ABS, CLOs, Commercial Real Estate and Investment Grade Private Credit.
Doug Ostrover, Co-CEO of Blue Owl Capital, said, “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.”
Further, OWL and Kuvare jointly entered into investment management agreements (IMAs). This will enable the company to allocate up to $3 billion of assets across varied platforms including Credit, GP Strategic Capital and Real Estate investment.
Kuvare will carry on the management of overall asset allocations of its insurance businesses and strategic investments. OWL’s IMAs with Kuvare are anticipated to be accretive to its permanent capital base.
Marc Lipschultz, Co-CEO of Blue Owl Capital, said, “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.”
The deal is expected to strengthen the OWL’s capital base, diversify revenues and broaden asset management capabilities.
Over the past six months, shares of Blue Owl Capital have jumped 51.3% compared with the industry’s 33.5% growth.
Image Source: Zacks Investment Research
Currently, OWL carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Financial Services Firms Taking Similar Steps
Last Month, Stifel Financial Corp. (SF - Free Report) announced its plan to acquire Finance 500, Inc. and CB Resource, Inc., market leaders in the underwriting and issuance of certificates of deposits (CD). The terms of the deal remain undisclosed.
The deal is expected to enhance and deepen SF’s CD funding offerings with market-leading CD underwriting, tech-enabled risk management and strategic planning capabilities. This aligns with the company’s efforts to expand its existing private client network and deposit base, which is the primary funding source, through expansion.
This February, Blackstone Inc. (BX - Free Report) announced the acquisition of $1.1 billion in credit card receivable from Barclays PLC (BCS - Free Report) for its Credit & Insurance segment. The transaction, subject to specific conditions, was funded during the first quarter of 2024.
This move is expected to enhance BX’s partnership with BCS, thus strengthening its institutional client base with deepened relationships. Under the terms of the deal, Barclays will enter into long-term strategic forward flow sale and service arrangements with BX related to the accounts. Blackstone’s investment will be made entirely on behalf of the firm’s insurance clients.