Here Comes a New $160 Billion Asset Manager
Six years in the making, Sun Life launches an independent institutional investment business.
Insurer Sun Life Financial has created an independent business, bringing together its affiliated asset management firms and the investment capabilities of its general account under a new brand called SLC Management.
This launch caps off six years of work. In 2012, Sun Life started building an asset management business to offer outside clients the strategies it uses for its own portfolio, such as commercial mortgages, liability-driven investing, and real estate.
“Everybody sees that institutional investors are looking for fixed income, LDI, de-risking, and alternatives. Those trends have existed for a while, and they’re continuing,” said Stephen Peacher, president of SLC Management, during an interview with Institutional Investor in New York. Peacher presented the initial strategy to Sun Life’s board in 2012.
“But this is the way we’ve managed our own money forever,” Peacher added. He argued that the investor-to-investor focus and alignment with clients differentiates SLC from competitors. In the last five years, he said, the asset manager has done $3 billion in seed- and co-investments alongside clients.
Sun Life is keeping its existing investment teams independent. But it will collect Sun Life Institutional Investments (U.S. and Canada), Ryan Labs Asset Management, Prime Advisors, and Bentall Kennedy under SLC Management. Fixed income managers Ryan Labs and Prime Advisors, which it acquired in 2015, will operate under the SLC Management brand. Sun Life plans to merge real estate firm Bentall Kennedy (also acquired in 2015) with GreenOak Real Estate, which it agreed to buy in a deal expected to close in a few weeks. The combined real estate business will be part of SLC Management but separately branded as BentallGreenOak. Once the GreenOak deal is final, the new multi-boutique will manage about $160 billion in assets, which includes $100 billion from Sun Life’s general account funds.
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At the same time, SLC Management is looking to acquire firms in areas such as private credit and infrastructure equity.
Private credit is increasingly popular with insurance companies and pension funds. “If I could wave a magic wand, I would love to have private credit as a big third-party offering,” said Peacher. SLC already has expertise in investment-grade and high-yield bonds, as well as in leveraged loans via a team it lifted out a few years ago.
Peacher is also targeting infrastructure equity. SLC Management currently runs only infrastructure debt. The U.S. is behind much of the developed world on infrastructure public-private partnerships, in part because the municipal bond market provides some capital for major projects. In Europe and Asia, however, the asset class is further along.
“There’s so much demand on the part of institutional investors for it, and so much need across society,” Peacher said. “And yet, if anything, it’s hard for investors to put money to work. It’s odd, given that you can see the need if you get on any road or go to any airport in the U.S. All of this money will eventually find a home.”