Sun Life Financial Inc.’s acquisition of a controlling stake in U.S. alternative asset manager Crescent Capital Group LP is a positive for the firm, says Moody’s Investors Service in a new report.
Last week Sun Life Financial (SLF) announced a deal to acquire a 51% stake in Crescent Capital for US$338 million.
Los Angeles-based Crescent invests in mezzanine debt, middle market direct lending, high-yield bonds and syndicated loans.
Moody’s said that the acquisition is consistent with SLF’s strategy to build up its third-party asset management capabilities while also limiting its reliance on asset management fees.
Asset management contributed 35% to SLF’s net income in the quarter ended June 30, it noted.
With approximately US$28 billion in assets under management (AUM), Crescent Capital represents a “modest” addition to Sun Life’s stable of third-party managers, Moody’s said.
The company’s stake in Crescent “will contribute only a small proportion of net income, therefore the acquisition does not risk creating over-reliance on market-sensitive fee income,” it said.