Alternative asset manager Blue Owl has announced it has agreed to acquire Kuvare Insurance Services LP (dba Kuvare Asset Management) (KAM) for $750 million, a deal that will support the launch of Blue Owl Insurance Solutions.
KAM is a boutique investment management firm focused on providing asset management services to the insurance industry, including Kuvare UK Holdings (Kuvare)
Blue Owl is planning to fund this acquisition through a combination of $325mn in cash and $425mn in Blue Owl Class A common stock.
The KAM acquisition is expected to close in the second or third quarter of 2024 and remains subject to customary regulatory approvals and other closing conditions and specified termination rights.
Upon closing of the KAM acquisition, most KAM employees are expected to join Blue Owl. In addition, there is potential for up to a $250mn earnout subject to certain adjustments and achievements of future revenue targets.
Doug Ostrover, Co-CEO of Blue Owl said: “The creation of Blue Owl Insurance Solutions represents a significant moment in Blue Owl’s journey. Our acquisition of KAM allows us to provide broader solutions to the multi-trillion-dollar insurance market at scale.
“KAM’s capabilities in investment grade credit and real estate strategies supplement Blue Owl’s existing strength in these asset classes and further accelerate our ability to bring differentiated products and strategies to the market for Kuvare and third-party insurance clients.”
Blue Owl has also invested $250mn in Kuvare UK Holdings, providing valuable growth capital to Kuvare’s insurance companies, each of which will become new asset management clients of Blue Owl.
Kuvare is a technology-enabled financial services firm operating several re/insurance businesses founded in 2015. Its business segments include retail, institutional reinsurance and specialty insurance advisory services.
In addition to Blue Owls investment in Kuvare, both companies have entered into investment management agreements (IMAs) that will allow Blue Owl to deploy up to $3bn of assets across its existing Credit, GP Strategic Capital and Real Estate investment platforms, which can grow over time.
The KAM acquisition, Blue Owl will add up to $20 billion in AUM for Blue Owl. Kuvare will continue to manage the overall asset allocations for its insurance businesses and strategic investments.
Blue Owl’s IMAs with Kuvare insurance companies will be additive to Blue Owl’s permanent capital base while enhancing Kuvare’s investment capabilities. These transactions are expected to be accretive to Blue Owl in 2024.
Marc Lipschultz, Co-CEO of Blue Owl stated: “Our preferred equity investment in Kuvare reflects our confidence in the growth trajectory of the business; both through its extensive distribution network and proven reinsurance strategy.
“This partnership with Kuvare anchors Blue Owl’s expanding presence in the insurance channel, greatly complementing our robust institutional and wealth footprint and further diversifying the markets for which we provide investment solutions. In aggregate, we believe these transactions reflect a creative approach to expanding our offerings for the insurance market at an attractive price.”
Dhiren Jhaveri, Founder, Chairman and CEO of Kuvare added: “It is an important and exciting step in the evolution of Kuvare to associate in such an impactful way with an asset manager of Blue Owl’s caliber.
“We always strive to be excellent stewards of assets entrusted to us by our policyholders and reinsurance partners, and the team at Blue Owl has demonstrated a unique commitment to helping us achieve our goals. We especially look forward to continued collaboration with our many valued KAM colleagues who will join the Blue Owl team at close of this transaction.”
