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Blue Owl Capital Inc. (NYSE:OWL) shares are trading higher after it disclosed a definitive purchase agreement to acquire Kuvare Insurance Services LP for $750 million.
Founded in 2015, Kuvare is a technology-enabled financial services firm operating several insurance and reinsurance businesses and has become a top 20 fixed and indexed annuity writer in the U.S, as per the company’s statement.
Blue Owl plans to fund the acquisition through $325 million in cash and $425 million in Class A shares.
The buyout is expected to close in the second or third quarter of 2024, subject to customary regulatory approvals and other closing conditions.
Post closure, there is potential for up to a $250 million earnout, subject to certain adjustments and achievements of future revenue targets.
Separately, Blue Owl disclosed a long-term investment in Kuvare, purchasing $250 million of preferred equity.
Apart from this, the companies inked investment management agreements (IMAs), which allow Blue Owl to deploy up to $3 billion of assets on its existing Credit, GP Strategic Capital, and Real Estate investment platforms.
Blue Owl will be allocated AUM of up to $20 billion after acquisition closure and expects these transactions to be accretive in 2024.
Doug Ostrover, Co-CEO of Blue Owl, said, “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.”
As of December 31, 2023, Blue Owl had cash and restricted cash of $659.7 million.
Investors can gain exposure to the stock via EA Series Trust WHITEWOLF Publicly Listed Private Equity ETF (BATS:LBO) and Gabelli ETFs Trust Gabelli Financial Services Opportunities ETF (NYSE:GABF).
Price Action: OWL shares are up 6.54% at $19.72 premarket on the last check Wednesday.
Photo via Shutterstock
