Man Group will take a controlling stake in U.S. private credit manager Varagon Capital Partners in a $183 million deal.
Varagon is a U.S. middle-market private credit manager with $11.8 billion in assets under management and a further $15.4 billion in total client commitments. The firm provides senior secured loans to sponsor-backed companies in non-cyclical industries, a news release and regulatory filing said Thursday.
Man will acquire its 73% stake from U.S. insurance company Aflac, multinational finance and insurance firms Corebridge Financial and American International Group, and former members of Varagon’s management team.
Varagon’s management team will roll its existing 27% interest into a structure to ensure long-term alignment with the combined firm. Man Group and Varagon management will have a reciprocal put/call option on that residual stake at years eight, nine and 10, subject to certain conditions.
Aflac, Corebridge and AIG together account for more than half of Varagon’s client commitments. The three firms have agreed to continue with their existing multiyear investment management agreements, the news release and filing said. Subject to maintaining a predetermined level of commitments over a nine-year period, Aflac, Corebridge and AIG will receive total extension payments of up to $93 million.
Walter Owens, CEO of Varagon, will continue to manage the business and will be supported by the existing 88 team members across its New York, Fort Worth and Chicago offices. The investment committee, team and processes will remain unchanged, but they will be bolstered by access to Man Group’s global distribution capabilities.
The deal is expected to close in the third quarter, subject to regulatory approvals. Varagon will be known as Man Varagon.
“This acquisition reflects our long-term strategy to move into new market segments where we can differentiate ourselves with talented, specialized teams,” said Eric Burl, head of discretionary at Man Group, in the release. With client demand for credit strategies on the rise, “we see a significant growth opportunity in direct lending, particularly against the backdrop of regional banking difficulties in the U.S.,” Mr. Burl said.
Varagon will join Man Group as an additional investment engine, said Robyn Grew, incoming CEO, in the release. “This acquisition is indicative of our commitment to diversifying our client offering and our strategic expansion ambitions in the U.S.”
Man Group already has private credit capabilities in Man GPM, focused on real estate. The firm also has other credit capabilities in other investment areas.
Man Group did not comment beyond the release and regulatory filing. Spokesmen for Varagon could not immediately be reached for comment.