Aflac Acquisition Targets Mid-Market Financing

Aflac Global Investments, the AFL asset management unit of Aflac Inc., has announced a takeover that will position the company to strengthen its financing operations in the middle market.

A report in Zacks Equity Research on Friday (Jan. 10) said that Aflac Global Investments has reached an agreement to acquire a minority stake in Varagon Capital Partners, a direct lender to mid-market companies. The deal also sees Aflac Global Investments committing up to $3 billion to Varagon to finance loans over several years.

The loans will be made on behalf of Aflac Japan and Aflac U.S., with the tie-up reflecting Aflac’s broader initiative to strengthen its investment in middle-market private debt, the report said.

“Varagon is very pleased to establish this strategic partnership with Aflac Global Investments,” said Varagon CEO Walter J. Owens in a statement when the deal was announced. “We appreciate the recognition of our expertise as an asset manager. This partnership will allow us to build on our proven broad-based direct origination capability and rigorous underwriting process while meeting the demands of our borrowers for proprietary middle-market corporate loans.”

In another statement, Bradley E. Dyslin – who is Aflac Global Investments’ senior managing director, global head of credit and strategic investment opportunities, and co-head of the external manager platform – said, “Varagon shares our core investment principles, which are grounded in deep fundamental credit research.”

He added that the company has developed a platform “based on thoughtful and disciplined credit underwriting standards consistent with our investment philosophy.”

The investment is subject to regulatory and other closing terms, the companies said. According to Zacks Equity Research reports, the deal is slated to close in the first quarter of 2020.

Aflac continues to strengthen its position in middle-market lending. In 2017, reports noted, the company acquired a minority stake in NXT Capital to manage its middle-market loan portfolio.