An essential monetary backer of billionaire Josh Harris’s new asset administration enterprise has acquired a uncommon public rebuke from Brookfield Asset Management, which complained that AEL, a life insurance coverage firm, shouldn’t be committing funds to a start-up.
Shares of the Iowa-based annuities vendor plunged 21 per cent after Brookfield, its largest shareholder, expressed dissatisfaction with the funding in a automobile Harris launched earlier this yr after leaving Apollo Global Management in a succession dispute.
Announcing his resignation from AEL’s board, Brookfield’s chief funding officer Sachin Shah wrote: “It is clear based on recent events that there has been a fundamental change in the strategic direction of [AEL].”
“As previously communicated, neither I nor Brookfield Reinsurance can support this change in strategy as being in the best interests of the company, its policyholders or its shareholders,” Shah added, in a letter filed on Tuesday.
Executives at Brookfield objected to AEL, whose full title is the American Equity Investment Life Holding firm, utilizing its assets to again Harris’s 26North Partners, a enterprise they regard as a brand new and unproven funding agency, an individual conversant in the matter stated.
In an announcement to the FT, AEL rejected these criticisms, saying the 26North funding was “similar to arrangements we have with multiple other asset managers that are generating value”, and “consistent with our . . . strategy which we first announced in October 2020”.
“We are also disappointed with Brookfield’s decision not to immediately appoint a new director,” the corporate added.
AEL chief government Anant Bhalla introduced a “modest” funding in 26North throughout an earnings name on Tuesday, talking of Harris, an Apollo co-founder, as “one of the foremost private equity investors in his generation”.
“AEL hopes to source future assets from . . . 26North,” he stated. “[It has] a lot of talent flocking to it.”
Brookfield first took a stake in AEL in 2020, shortly after the insurer fended off an unsolicited takeover bid from Apollo’s annuities affiliate Athene Holding. The Canadian group additionally created a reinsurance affiliate to initially handle $5bn of the Iowa firm’s annuity liabilities, and as we speak owns 18 per cent of the insurer.
AEL has lately been investing extra aggressively in personal belongings at a time when different funding managers similar to Apollo, Blackstone, KKR and Carlyle have joined forces with insurance coverage firms as a technique to construct their credit score investing items.
AEL on Monday introduced 18 per cent of its funding portfolio is now deployed in “higher-yielding privately-sourced assets”. Prior to Tuesday’s plunge, the corporate’s shares have been up practically a tenth for the yr.
Brookfield stated it was additionally invoking a contractual proper to pressure the insurer to file paperwork that might permit the Canadian group to promote practically 60 per cent of its AEL inventory.
Harris resigned from the Apollo board earlier this yr after a 30-year profession on the group. He had been a contender to exchange Leon Black as CEO final yr however the job went to Marc Rowan, the architect of the corporate’s insurance coverage ventures.
Representatives for 26North, Harris and Brookfield declined to remark.
Source: www.ft.com