Sun Life deal for U.S. fund manager a win: Moody’s

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.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.