Massachusetts Mutual Life Insurance Company will move its direct private investments group and an equipment finance company to its asset management subsidiary Barings — a deal that will give the two organizations a leg up in the business of managing insurance assets.
The transaction, which is planned for the second quarter, will help grow the investment strategies by giving access to more third-party institutional investors through Barings.
Eric Lloyd, president of Barings, which has $347 billion in assets, told Institutional Investor that the move has been under discussion for months as part of a larger ongoing effort to make the most of the two organizations’ partnership.
Lloyd said that he and Phillip Titolo, MassMutual’s head of direct private investments, have talked about how to continue to grow the capabilities, which have become an important and sizeable part of the general investment account at the insurance company, and how to use them “in a way that [allows them to continue] to do what they’re doing, with no change in business strategy in any way, shape or form.”
“This simply allows him [Titolo] to access bigger pools of capital and continue on the growth trajectory that he’s been on,” Lloyd added. The direct private investments group provides customized proprietary secured loans to private capital managers and funds backed by a range of private assets. MassMutual’s asset finance group originates, underwrites, funds, and manages large ticket capital equipment transactions.
Lloyd emphasized that Titolo has built a business with strong origination capabilities that strongly complements other areas within Barings. “Your ability to originate private assets and that access to those borrowers or clients is currently — and over time will continue to be — a very important differentiator.”
The group also generates assets that are important for insurance investors, which has been a strategic objective of Barings for the last couple of years.
“We speak insurance,” added Titolo in the interview. He said that many asset managers don’t understand insurance. They come in and say, ‘You’ve got a $200 billion balance sheet, write me a check for $100 million — it’s not that big a deal.’” But he explained that only asset managers that don’t understand how regulatory capital works would say a $100 million check from an insurance company is not a big deal.
MassMutual started doing portfolio lending in 2017 and incubated the effort for about two years before putting more capital from the insurance company behind it. Now it’s at a place, with a 30-person team, where it can bring in other insurance investors and “maybe some other non-insurance investors,” said Titolo. “This is a natural subset of investment-grade private placements.”
