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Two prominent asset management firms on Wall Street are in the running to acquire Brighthouse Financial, a life insurance company seen as a prime target for businesses eager to enhance their standing in the private credit sector.
TPG and Aquarian Holdings, the latter of which is supported by Abu Dhabi’s Mubadala Capital, have both made bids slightly above Brighthouse’s market valuation in this month’s final bidding round, according to sources familiar with the situation.
Brighthouse, boasting over $100 billion in assets and a market value exceeding $3.5 billion, is one of the largest remaining independent providers of life insurance and annuities in the United States. These types of insurers are highly sought after by asset managers to expand their credit investment operations, as the premiums collected serve as a substantial source of capital for investments.
Over the past decade, companies such as KKR, Brookfield, and Apollo Global have purchased insurers.
Private equity firms allocate client investments into loans, preferring them over publicly traded stocks in pursuit of better returns.
The sale of Brighthouse, which was first reported by the Financial Times in January, attracted interest from many leading firms in the sector. Blackstone, Apollo, and Carlyle considered making bids but ultimately withdrew, according to informed sources. Sixth Street did submit a bid for Brighthouse, but its proposal did not progress, the sources mentioned.
Some potential bidders lost interest in Brighthouse during their assessments of its financial health and annuities portfolio, according to those with knowledge of the discussions.
Brighthouse has faced challenges in enhancing its profits to meet its target capital ratios. Its emphasis on variable annuities—complex products that are costly to hedge and entail significant capital requirements—has also tempered interest in a takeover, some sources previously indicated to the FT.
The company holds legacy insurance contracts that have impacted its overall value, despite selling new annuities that have attracted prospective buyers, according to some insiders.
Nonetheless, it remains one of the few multibillion-dollar insurers on the market that could be appealing for a large credit firm looking to expand.
One of the bidders is expected to be invited to exclusive negotiations next week. However, Brighthouse may choose not to proceed with the sale if the bids are considered inadequate, as indicated by two sources. Meanwhile, several larger competitors in the private capital space, including Blackstone, Carlyle, Apollo Global, and Sixth Street, either did not place final bids or did not see their offers move forward, according to six individuals familiar with the talks.
TPG, a Texas-based private equity leader that is publicly traded, currently does not have an insurance division and may opt to sell off portions of Brighthouse that it is less interested in, according to two sources.
Aquarian, a New York-based asset manager established by former Guggenheim Partners executive Rudy Sahay, made a bid backed by substantial sovereign wealth funds, including Mubadala, the sources added.
TPG, Aquarian, Brighthouse, Apollo, Blackstone, Carlyle, Sixth Street, and Mubadala Capital did not provide comments. Advisers Goldman Sachs and Wells Fargo also opted not to comment.
If a sale of Brighthouse is finalized, it would add to the ongoing trend of consolidations among similar insurers. Sixth Street is working to finalize its acquisition of Enstar. Moreover, other major life insurance providers, such as American Equity Life, American National, Global Atlantic, and Talcott Resolution, have merged with alternative asset managers.
Additional reporting by Lee Harris in London
