Aflac Global Investments has agreed to acquire a "significant non-controlling interest" in direct-lending specialist Varagon Capital Partners, an Aflac news release said.
As part of the deal, announced Wednesday and expected to close in the first quarter, Aflac will commit $3 billion to be invested by Varagon in middle-market loans over a multiyear period.
Aflac will acquire the ownership interest in Varagon from certain current and former partners and affiliates of Oak Hill Capital Management.
American International Group and Oak Hill were initial investors in Varagon when it opened in June 2014. The size of the minority stakes held by AIG and Oak Hill were not disclosed in announcements about the launch of Varagon.
Terms of the deal and the size of the stake Aflac is acquiring are not being disclosed, Aflac spokesman Jon Sullivan said in an interview. Varagon spokesman Nathaniel Garnick and AIG spokeswoman Carla Ferrara declined to comment.
AIG, which committed $1.5 billion with Varagon as part of the 2014 deal, will retain its minority ownership stake in the credit manager.
AIG and Aflac will have equal ownership stakes in the direct lender, a Varagon news release said.
"We are excited to welcome Aflac as a new partner and to continue our strategic relationship with AIG. These long-term commitments from two world-class insurers provide access to substantial capital, enhance Varagon's capabilities to serve investors and borrowers and accelerate the execution of our strategic growth objectives," Varagon CEO Walter J. Owens said in the firm's news release.
"Middle-market credit is a strategically important asset class for Aflac and we are excited to partner with Varagon," said Eric M. Kirsch, executive vice president of Aflac Inc., global chief investment officer and president of Alfac Global Investments, in the Varagon release.
Varagon managed $2.6 billion in discretionary assets and $6.4 billion in non-dicretionary assets as of Dec. 31, 2018, according to the firm's most recent ADV filing with the Securities and Exchange Commission.