Massachusetts Mutual Life Insurance is transitioning two private lending businesses with combined assets of $30 billion to its Barings asset management subsidiary.
The move positions them to access third-party institutional money for the next stage of their growth, according to a Feb. 27 news release.
MassMutual will transition its direct private investments business, with $22 billion in loans financing portfolios managed by private markets firms, and its MassMutual Asset Finance equipment finance company, with $8 billion in assets under management, to Barings during the second quarter of 2023, according to Phillip Titolo, MassMutual’s head of direct private investments, in an interview.
Mr. Titolo will take on the same head of direct private investments title at Barings, bringing his entire 30-member team with him to the money management firm. Barings reported AUM of $347 billion as of Dec. 31.
Mr. Titolo said MassMutual launched its direct private investments business in 2017 after a large asset manager approached the insurer, looking for more customized, flexible portfolio financing than banks were typically offering.
"I looked at what they needed (and) how we could structure it … and we created an investment grade, private portfolio loan," said Mr. Titolo. "That was in 2017 and we've been doing it" ever since, extending $35 billion in loans over that time, he said.
The business, fueled solely by funds from MassMutual's general account, is being positioned now so that under Barings, third party institutional investors will be able to invest alongside MassMutual. The insurer is looking to make continued investments, but the scale of the risk-adjusted spread opportunities in the investment grade space now are greater "than even a MassMutual would be able to take on," said Mr. Titolo.