Friday , December 3 2021

Sun Life targets Asia for M&A after deal spree

Bloomberg

Sun Life Financial Inc, after shelling out almost $4 billion in the past two years to build up its US and asset-management businesses, is now poised to focus its dealmaking on Asia.
Chief Executive Officer Kevin Strain, who took the reins in August, said that Asia’s growing middle class and the company’s goals for increasing earnings in the region by 15% a year make it a more likely target for acquisitions in the years ahead. The comments come about two weeks after the Toronto-based life insurer and asset manager unveiled a four-point strategy that enshrines dealmaking as a key pillar of its plans.
“There’s probably slightly more opportunities in Asia from an M&A standpoint than there are in the other markets,” Strain said. “So I would say that Asia is definitely a focus, but I wouldn’t say that it would be at the detriment of the other pillars.”
Focusing on Asia, where Sun Life already generates about 20% of its earnings, would mark a change from recent years in which deals have been concentrated elsewhere.

The company last month announced the $2.48 billion acquisition of U.S. dental-benefits provider DentaQuest, which will more than double its employee-benefits revenue south of the border. That followed the $85 million takeover in July of Pinnacle Care International Inc., which provides technology that helps customers navigate the U.S. health-care system.
Sun Life’s asset-management business also has been a beneficiary of its spending. The company’s SLC Management alternative-assets business has gotten a major boost in the past year and a half through the $390 million acquisition of infrastructure-investment firm InfraRed Capital Partners and the $338 million purchase of a 51% stake in alternative-credit investor Crescent Capital Group.
All told, Sun Life has announced eight acquisitions totaling $3.9 billion over the past two years, according to data compiled by Bloomberg.
SLC Management, led by President Steve Peacher, may “look at adding some capabilities around the edges,” but Strain said he’s glad the business has its major acquisitions out of the way as valuations for those businesses have risen.
“I don’t think there’s any question that it’s gotten more competitive,” Strain said. “If you look at the economic environment — with low interest rates and institutional investors looking for yields — the alternatives space is a sought-after space. We saw it early and built out our capabilities quickly, and that’s been to our benefit.”

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