Varagon Capital Partners, a direct lender to middle market companies, has entered into a definitive agreement to establish a strategic partnership with Aflac Global Investments, and has also extended its existing partnership with insurer and reinsurer, AIG.
AIG has been an anchor investor and client of Varagon since 2014 and has extended its investment commitment to continue to support the growth of the platform.
Once the new partnership with Aflac closes, Aflac is set to make a new multi-year investment commitment of up to USD 3 billion to Varagon to invest in middle market loans. At the same time, Aflac is to acquire a significant non-controlling minority interest in Varagon from certain former and current partners and affiliates of Oak Hill Capital Management.
Varagon states that this transaction will not reduce ownership of Varagon by management of AIG, and that once completed, Aflac and AIG will hold equal ownership stakes in the company.
Following the deal, Varagon will continue to operate as an independent firm with no changes to its strategy, investment philosophy, management team, or daily operations.
Walter Owens, Chief Executive Officer (CEO) of Varagon, commented: “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.
“We appreciate Aflac’s recognition of Varagon’s capabilities as a leading middle market asset manager and we look forward to a successful partnership.”
Geoffrey Cornell, Deputy Chief Investment Officer (CIO) of AIG Investments, added: “As a long-term investor with a focus on credit discipline, we see an attractive opportunity in middle market credit and are pleased to continue our partnership with the Varagon team. We are proud to have been an early backer of Varagon. We are looking forward to Aflac joining our strategic partnership to jointly support Varagon’s continued growth.”
The transaction is expected to close in the first-quarter of 2020, and remains subject to closing conditions and regulatory approvals.
Eric M. Kirsch, Aflac Incorporated Executive Vice President, Global CIO and President of Aflac Global Investments, said: “Middle market credit is a strategically important asset class for Aflac and we are excited to partner with Varagon. Varagon’s rigorous investment underwriting process and proven origination capabilities directly align with Aflac’s strategy of partnering with high-quality asset managers.”
