When MetLife Investment Management, the $571 billion institutional asset manager of the namesake insurance company, bought a $2.1 billion alternative investments firm, it probably didn’t sweat over the price. But the acquisition gives MetLife Investment Management significant new fire power in private credit.
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What MetLife Investment Management Wants With a Small Alts Firm
Managers can enter new markets faster and increase the odds of gaining new assets when they buy teams, rather than build.
MIM said on Tuesday that it bought Raven Capital Management, a private credit manager that specializes in primary origination, underwriting, execution and management of middle market direct asset-based investments. Although details of the transaction were not disclosed, Raven’s capabilities give the investment arm of MetLife deeper and new expertise.
“We already have strong capabilities across investment grade credit, structured credit and private equity sponsored middle market private credit,” Nancy Mueller Handal, global head of private fixed income and alternatives at MIM, said. But the addition of Raven will help differentiate MIM’s existing private credit strategies, and significantly advance its higher yielding credit offerings and ability to directly originate investments overall, she said.
Although MIM’s private capital business is large, private credit segments and strategies within it vary in size. Some are similar to Raven, Mueller Handal said.
While Raven’s team will help generate new growth opportunities across MIM’s private capital business, it will also benefit from MIM’s global distribution footprint.
After an abysmal year in the markets, asset managers are doing some soul-searching. If they decide to strengthen strategies, or add new ones, it’s often easier to acquire a business. Hiring the right professionals and developing a specialized group from scratch is expensive. They would have to be investing for three years or longer before winning mandates from most institutions.
“Building a track record, expertise and credibility in any strategy is a time consuming and expensive undertaking,” Brian Lauzon, managing director at InCap Group, a boutique investment bank focused on the wealth and asset management industries, told Institutional Investor. “Acquisitions like these are a way for large, multi-strategy firms like MIM to break into new product areas faster. And by going to market with a time-tested, talented team like the one at Raven Capital, they do so with a higher probability of attracting new assets to the strategy.”
Combining Raven’s team with MIM’s scale and global breadth will open a “lot of new paths to growth,” he added.
Josh Green, founder, president and chief investment officer at Raven, said in a statement that the deal will accelerate the success of both companies and that “MIM is a like-minded partner positioned for continued growth. We look forward to the opportunity to bring investment solutions to an even broader group of institutional clients.”
Green founded Raven in 2008. He was previously a managing director at Merrill Lynch and his asset-focused principal investment strategy led to the establishment of Merrill Lynch’s Alternative Assets Group, according to Raven. During his 10 years at Merrill lynch, he and his team originated and managed a $12 billion investment portfolio.
MIM, which manages fixed income and real estate assets for more than 250 institutional clients, including insurance companies, pension and defined contribution plans, endowments, and foundations, also acquired a $1 billion London-based fixed income manager focused on impact investing last year.
Mueller Handal didn’t rule out other deals in the future.
“While we cannot comment on future plans, MetLife remains steadfastly committed to deploying capital to its highest and best use,” she said. “We believe that the recently completed acquisition of Affirmative Investment Management and the announced agreement to acquire Raven Capital Management are strong examples of our ability and intention to partner with expert investors and leading franchises with proven investment capabilities that broaden MIM’s already robust global platform.”