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Ares Management Corp. is providing a direct-lending package of about £1 billion ($1.2 billion) to support the merger of two personal insurance businesses in the UK, according to people familiar with the matter.

Ardonagh Group — a large borrower in the $1.5 trillion private credit market — is selling its Atlanta Group division to UK insurer Markerstudy. The deal will create a new business with nearly 8 million customers across its home and motor insurance units and more than £3 billion in annual premiums.

The tieup is also being funded by Pollen Street Capital Ltd and Bain Capital, according to a statement from Ardonagh. Pollen Street will remain Markerstudy’s majority owner, while Ardonagh will keep a minority equity stake in the combined business as well as receiving cash from the sale.

Ardonagh Sells £1.2 Billion Å˽ðÁ«´«Ã½Ó³»­ Unit to UK Insurer Markerstudy

Spokespeople for Ares, Ardonagh, Pollen and Markerstudy declined to comment. Press representatives for Bain didn’t immediately respond to a request for comment from Bloomberg News.

Ares previously led a £1.875 billion loan for Ardonagh in 2020, which the firm said was the largest ever so-called unitranche financing at the time.

Direct-lending firms such as Ares have stolen a march on their traditional rivals over the past few years, as rising rates and fears of an economic slowdown muted appetite among investment banks to underwrite new deals.

Speaking at Bloomberg’s Global Credit Forum last week, Ares Management co-founder Mike Arougheti said he expects the private credit market to double to $3 trillion within five years. The firm is currently fundraising for its latest European direct lending fund, Ares Capital Europe VI. It hit its first close earlier this year at about $8.7 billion.

Photograph: Skyscrapers and commercial buildings on the skyline of the City of London, UK, on Monday, March 6, 2023. Photo credit: Jason Alden/Bloomberg

Topics Mergers & Acquisitions