TPG Inc enters partnership with Jackson Financial to manage USD12b
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The news: US private equity firm TPG Inc and Jackson Financial have reached a deal which will see TPG manage up to USD20 billion ($29.75 billion) for the US retirement services business.
The numbers: Statements shared by the companies on Tuesday said that under the agreement, TPG will manage a minimum commitment of USD12 billion of AUM for Jackson, with incentives aligned to a long-term target of USD20 billion. The investment partnership will focus on investment-grade asset-based credit and direct lending.
As part of the transaction, TPG will also invest USD500 million into Jackson, representing an approximate 6.5% pro forma stake.
Jackson will also receive USD150 million in TPG shares, with the potential for more if the partnership grows to USD20 billion.
The context: The deal comes as alternative asset managers are looking to secure new sources of capital as traditional investors remain constrained around how much capital they can allocate toward private assets.
Jackson said that the capital from TPG’s investment together with USD150 million in excess cash from Jackson, will be used for the initial capitalisation of the annuity provider’s new Michigan-based captive reinsurer, Hickory Brooke Reinsurance Company. The reinsurer was formed to serve as a capital-efficient way to accelerate further sales growth of Jackson’s fixed and fixed index annuity products.
Skadden, Arps, Slate, Meagher & Flom LLP served as a legal adviser to Jackson. Debevoise & Plimpton LLP served as TPG’s legal counsel and Oliver Wyman served as TPG’s actuarial adviser.
What they said: CEO of TPG, John WinkelRied, said in a statement: This strategic partnership is an important step in the evolution of our franchise and insurance practice, creating opportunities for us to extend the duration of our capital, while scaling our product capabilities.”
The sources: TPG, Jackson Financial
