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Asset management firms engage in complex business transactions

Financial management and investment companies in Texas and elsewhere engage in mergers and acquisitions just like other corporate entities. For example, Voya Financial, Inc., a publicly-traded investment management firm, recently announced that it will divest itself of its annuity business and sell that segment to an investment consortium led by Apollo Global Management, LLC and Reverence Capital Partners. The divestiture will allow Voya to concentrate on its retirement, investment management and employee benefits businesses. These kinds of business transactions take place regularly, both nationally and internationally.

Voya intends by the move to be able to focus solely on the foregoing higher-growth, higher-return and more capital-light enterprises. Voya also sees a lightening of its risk exposure by selling of the annuity businesses. Voya’s chairman and chief executive officer stated that the company will now be able to focus on its core businesses.

He indicated the company will have increased capacity going forward to better assist its clients in preparing for their retirements. He also pledged a “seamless” transition for its annuity customers. In fact, Voya will remain invested in the annuities business by owning 9.9 percent of the equity in Venerable Holdings, Inc., which is the new investment vehicle that will administer the annuity transactions.  

Voya estimates that the transaction will bring about $1.1 billion of value into the company, with immediately deployable capital in excess of $500 million. It intends to use the additional capital to repurchase back outstanding shares of stock. The CEO indicated the company plans to buy back $1 billion of its common stock by June 30, 2018. He stated also that VOYA has increased its brand awareness to becoming one of the most well-known names in the retirement industry, and the company will also participate in managing certain annuity funds as part of the deal. It is not unusual for businesses based in Texas to participate in business transactions with similar features and dynamics.  

Source: insurancenewsnet.com, “Voya to Exit Much of its Annuities Business“, Dec. 21, 2017

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