Sun Life Financial Inc. (TSX: SLF) (NYSE: SLF) today announced that it intends to acquire a majority stake in InfraRed Capital Partners ("InfraRed"), a global infrastructure and real estate investment manager. InfraRed advises institutional and pooled fund clients on approximately US$12 billion (C$16 billion) in assets under management as of September 30, 2019. InfraRed is headquartered in London, U.K. and has more than 175 partners and staff.
InfraRed will form part of SLC Management, Sun Life's alternatives asset management business. The acquisition is integral to Sun Life's strategy of broadening its asset management pillar by extending the capabilities of SLC Management to the benefit of existing and prospective clients.
Sun Life will acquire an 80% interest in InfraRed for consideration that includes a closing payment of £300 million (approximately US$390 million, C$515 million). InfraRed's owners will have a put option to sell their remaining interest to Sun Life approximately four years from the closing and Sun Life will have the option to call any remaining interest approximately five years from the closing.
As part of the transaction, Sun Life has committed to co-invest US$400 million (approximately C$530 million), including general account investments, to support the launch of new InfraRed investment solutions. This co-investment provides alignment between Sun Life and SLC Management's clients.
"We're excited to acquire a majority position in InfraRed, which further broadens SLC Management's alternative solutions to now include infrastructure equity," said Steve Peacher, President, SLC Management. "InfraRed is a leader in global infrastructure investing in both greenfield and brownfield projects, including renewable energy. These investments have historically provided the returns and horizon that institutional clients are seeking."
Peacher added, "We established SLC Management in 2014 to develop a line-up of fixed income and alternative strategies to help institutional investors meet their obligations, similar to how we invest our own general account at Sun Life. InfraRed's proven investment capabilities in infrastructure are a natural extension of SLC Management's solution set. There is also a strong cultural fit between the two firms."
"I am delighted to announce this transaction with Sun Life and SLC Management which enables us to drive the growth of our business in the Americas, in particular the renewable energy market," said Werner von Guionneau, Chief Executive Officer, InfraRed Capital Partners. "SLC Management and InfraRed have complementary capabilities, a similar culture of prudence and long-termism, and proven track records of delivery."
von Guionneau added, "InfraRed has grown to become a leading international infrastructure investor. To build on this success, our ambition is to continually evolve so that we maximize the potential of our capabilities and address the exciting market opportunities we see in infrastructure overall and particularly around the low carbon energy transition. This transaction is the perfect way to do this and the InfraRed management team and I look forward to working closely with SLC Management and Sun Life to realize our ambitions."
The transaction is expected to close during the first half of 2020, subject to receipt of regulatory approvals and satisfaction of customary closing conditions.
Skadden, Arps, Slate, Meagher & Flom LLP served as Sun Life's legal counsel and Fenchurch Advisory Partners served as financial advisors. Ardea Partners International LLP were financial advisors to InfraRed and Weil, Gotshal & Manges LLP served as their legal counsel.