Man Group buys majority stake in fund manager Varagon Capital Partners worth $11.8 billion as it seeks growth in the US
- Varagon Capital Partners specializes in direct lending to medium-sized companies
- The US mid-market generates a third of the country’s private sector GDP
Acquisition: New Man Group CEO Robyn Grew (pictured) said the acquisition of Varagon is “an indication of our commitment to diversifying our customer offerings”
Man Group has agreed to acquire a controlling interest in mid-market credit management company Varagon Capital Partners as part of a strategy to strengthen its presence in the US.
The FTSE 250 asset manager told investors on Thursday that the deal would provide “significant institutional credibility” to support its expansion in the US private credit market, especially given Varagon’s presence in the insurance sector.
The deal will see Man Group pay $183 million (£143 million) to financial services firms Aflac, Corebridge Financial and American International Group, as well as former members of Varagon’s management.
Man Group shares were 1.6 percent higher at 221.5 p early Thursday afternoon, making them the highest riser on the FTSE 250 Index.
Varagon, headquartered in New York, specializes in direct lending to medium-sized businesses.
It has assets under management totaling $11.8 billion and $15.4 billion in customer liabilities as of last December.
Varagon posted 2022 total revenues of $116.3 million and pre-tax earnings of $30.9 million, and has delivered 13 percent compound AUM growth over the past three calendar years.
Walter Owens, the company’s CEO, will continue to lead Varagon once the transaction closes sometime in the third quarter.
Owens said: ‘Man Group’s deep experience in building custom solutions for clients and best-in-class technology will help us better serve our clients and further strengthen our position as a differentiated capital solutions provider in the core mid-market. ‘
According to investment bank Rothschild & Co.
Robyn Grew, Man’s incoming CEO, said the “acquisition is an indication of our commitment to diversifying our customer offerings and our strategic expansion ambitions in the US.”
She added, “Varagon has built a high-quality investment platform and shares our vision to deliver outperformance for clients.”
Grew, 54, will replace Luke Ellis as the company’s CEO in early September, making her one of the few women in the world to lead a major fund.
The former criminal defense attorney is currently Man’s president, having previously held the positions of chief operating officer, global counsel, head of environment, social and governance, and chief legal and compliance officer.
Grew joined the firm 13 years ago when GLG Partners, where she was Chief Compliance Officer, was purchased by Man Group in one of the largest deals ever seen in the hedge fund industry.
Prior to that, she worked for Barclays Capital, Lehman Brothers, Fidelity and futures exchange LIFFE, which was renamed ICE Futures Europe after a series of mergers and acquisitions.