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Athene (ATH) to Buy Petros PACE, Boost Origination Platform

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Athene Holdings has agreed to buy Petros PACE Finance, LLC. Pending the fulfillment of closing conditions, the transaction is expected to see the light of day in the first half of 2022. Apollo Global Management (APO - Free Report) will manage the investment on behalf of Athene.

Athene and Apollo have shared a partnership since the former was established in 2009. Apollo currently holds a 34% stake in Athene. The strategic partnership helps Athene access APO’s portfolio origination platform that provides ATH assets with better spreads.

Petros PACE Finance is a leading provider of Commercial Property Assessed Clean Energy (“C-PACE”) financing to owners and developers of commercial properties throughout the United States. The company has originated over $700 million in long-term, fixed-rate financing for energy efficiency, water efficiency, renewable energy and resiliency projects in five years.

The addition of Petros PACE Finance will complement Athene’s portfolio of diversified origination platforms. Petros PACE Finance, on the other hand, leveraging the expertise of Athene and Apollo, will be poised to accelerate its C-PACE business. With increasing awareness and demand for energy-efficient properties, Petros PACE Finance is poised for growth given its flexible funding solutions.

Recently, Athene and Apollo agreed to buy a majority interest in Aqua Finance, a fast-growing consumer lending platform, originating and servicing consumer loans primarily for home improvement and water treatment.

Such strategic acquisitions will boost Apollo’s $80 billion annual run-rate of asset origination across commercial and consumer lending platforms. Athene boasts an impressive inorganic growth, which has been driven by several buyouts and block reinsurance transactions with several companies. The insurer expects that its inorganic growth channel will continue to be an important driver in the future. Athene currently carries a Zacks Rank #2 (Buy).

Shares of Athene have gained 82.5% year to date compared with the industry’s 1.8% decrease. A higher level of sales, strategic investments, and sufficient liquidity should help shares retain the momentum.

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Given the insurance industry’s adequate capital level, players like Stewart Information Services Corporation (STC - Free Report) and HCI Group Inc. (HCI - Free Report) are pursuing strategic mergers and acquisitions.

Stewart Information has acquired Devon Title Agency to expand in Michigan. Stewart Information has a sizable merger and acquisition pipeline. It boasts a strong balance sheet with $585 million over regulatory requirements and $74 million on an existing line of credit facility supporting growth initiatives. Stewart Information remains focused on improving operational efficiencies by adding scale, investing in priority markets and strengthening core business with real estate technology and services.

HCI Group has agreed to acquire United Insurance Holdings’ personal lines insurance business in the states of Georgia, North Carolina, and South Carolina to expand into new geographies. Well-performing Homeowners Choice and TypTap coupled with conservative reserving practice should continue to support HCI’s growth story.

Shares of Apollo, Stewart Information and HCI Group have gained 40.1%, 52.5% and 64.3%, respectively, year to date.  

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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