NEW YORK - Aflac Global Investments (AGI), the asset management arm of insurance giant Aflac Incorporated (NYSE:AFL), has agreed to purchase a 40% stake in Tree Line Capital Partners, a direct lender focusing on the lower middle market. The deal also includes a multiyear commitment from Aflac to allocate part of its investable annual cash flow to Tree Line, which is based in San Francisco.
Tree Line, established in 2014 by Managing Partners Tom Quimby and Jon Schroeder, manages assets worth $2.7 billion. It has made over 360 investments, committing a total of $5 billion since its inception. Despite the change in ownership, Tree Line will maintain its investment and operational independence, with Quimby and Schroeder continuing to lead the firm and serve on its board.
Bradley E. Dyslin, Executive Vice President and Global Chief Investment Officer at Aflac, expressed confidence in the alignment of Tree Line's disciplined credit underwriting with Aflac's investment principles. He emphasized the strategic importance of the middle market direct lending asset class for Aflac's $100 billion investment portfolio.
The partnership aims to accelerate Tree Line's growth and enhance its capabilities to serve investors, sponsors, and borrowers. Tree Line has witnessed consistent growth and this partnership is expected to further strengthen its position in the market.
Catherine Cole, Aflac Global Investments Managing Director and Global Head of Private Debt and Strategic Partnerships, highlighted Tree Line's strong track record and leadership team as key reasons for the partnership.
The transaction, advised by Evercore for Aflac and Berkshire Global Advisors for Tree Line, remains subject to regulatory approvals.
The information in this article is based on a press release.
InvestingPro Insights
Aflac Incorporated (NYSE:AFL), known for its robust financial health and shareholder-friendly practices, is making strategic investments to diversify and strengthen its portfolio. According to recent data from InvestingPro, Aflac boasts a market capitalization of $49.71 billion, reflecting its significant presence in the insurance industry. The company's commitment to shareholder returns is evident, as it has not only maintained but also increased its dividend for an impressive 40 consecutive years, a testament to its financial stability and prudent management.
An InvestingPro Tip worth noting is that Aflac's management has been actively engaging in share buybacks, a move that often signals confidence in the company's future prospects and a commitment to delivering value to shareholders. Additionally, with a P/E ratio (adjusted for the last twelve months as of Q1 2024) of 9.29, Aflac is trading at an attractive valuation relative to its near-term earnings growth potential. This is further underscored by a PEG ratio of 0.37, suggesting that the company's stock price is undervalued based on its earnings growth rate.
Investors may also be encouraged by Aflac's strong liquidity position, as its liquid assets exceed short-term obligations. This financial flexibility could be a key factor in facilitating strategic acquisitions like the recent stake purchase in Tree Line Capital Partners, enabling Aflac to tap into new growth avenues while maintaining operational stability.
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