Man Group to buy controlling interest in Varagon Capital Partners

Man Group has agreed to acquire a controlling stake in middle-market credit manager Varagon Capital Partners under a strategy to boost its presence in the US.

The FTSE 250 asset manager told investors Thursday that the deal would deliver ‘significant institutional credibility’ to support its expansion in the US private credit market, especially given Varagon’s presence in the insurance sector. 

The deal will see Man Group pay $183million (£143million) to financial services firms Aflac, Corebridge Financial and American International Group, as well as former members of Varagon’s management.

Man Group shares were 1.6 per cent higher at 221.5p on early Thursday afternoon, making them the highest riser on the FTSE 250 Index. 

Headquartered in New York, Varagon specialises in direct lending to medium-sized business. 

It boasts assets under management totalling $11.8billion, and $15.4billion of client commitments as of December last year.

Varagon recorded $116.3million in total turnover and a $30.9million pre-tax profit in 2022, and has achieved compound AUM growth of 13 per cent over the past three calendar years.

Walter Owens, the company’s chief executive, will still manage Varagon once the transaction is completed at some point during the third quarter.

Owens said: ‘Man Group’s deep experience building bespoke solutions for clients and best-in-class technology will help us to better serve our clients and further reinforce our position as a differentiated capital solutions provider in the core middle market.’

The US mid-market – businesses with an annual revenue of between $10million and $1billion – provides one-third of the country’s private sector GDP, according to investment bank Rothschild & Co.

Robyn Grew, the incoming CEO of Man, said the ‘acquisition is indicative of our commitment to diversifying our client offering and our strategic expansion ambitions in the US’.

She added: ‘Varagon has built a high-quality investment platform and shares our vision to deliver outperformance for clients.’

Grew, 54, will replace Luke Ellis as the firm’s CEO at the beginning of September, making her one of the few women globally to run a major fund.

The former criminal barrister is currently the president of Man, having previously held the positions of chief operating officer, global counsel, head of environmental, social and governance, and chief legal and compliance officer.

Grew joined the firm 13 years ago when GLG Partners, where she was chief compliance officer, was bought by Man Group in one of the hedge fund industry’s biggest-ever deals.

Before that, she worked for Barclays Capital, Lehman Brothers, Fidelity, and futures exchange LIFFE, which was subsequently renamed ICE Futures Europe following a series of mergers and acquisitions.