Bain Capital intensifies strategy specialisation efforts with USD 1.15bn insurance fund

Rachel Lewis
02 August 2023

Tweet
Facebook
LinkedIn
Google plus
Send to

Bain Capital is reinforcing its push towards specialised strategies with a new USD 1.15bn fund aimed at the insurance sector via corporate carve-outs and buy-and-builds, Matt Popoli, global head of Bain Capital Insurance, told this news service.

Bain Capital Insurance Fund, the inaugural vehicle of this strategy, closed above its USD 750m target, becoming the GP's fourth bucket of specialised equity strategies after impact, life sciences, and growth tech.

"Bain thought about the specialisation trend way back. LPs like that we have experts in an area where there are such complexities," said Popoli. Bain formally launched Bain Capital Insurance in 2021 and today employs around 20 people.

The fund includes approximately USD 1bn of external commitments from institutional investors, high-net-worth individuals and families, with the remainder a GP commitment. Bain said in a statement that this reflects its "heritage" of being the largest investor across its funds.

Value chain opportunities
The fund will deploy USD 50m-USD 200m tickets across 12-14 deals in the insurance value chain in North America and Europe, predominantly in the general insurance, life annuity and pensions, and health sub-sectors. It will bring in co-investors at the larger end of the ticket size.

Its main focus is primary buyouts, via corporate carve-outs, corporate transformations and buy-and-builds.

However, it is flexible in deploying growth capital in related tech businesses where it can benefit from softened valuations, as long as there is some downside protection via convertible instruments or preferred equity.

"We're a more than USD 1bn fund but we're not afraid to start small then grow organically and do platform builds," he said.

The fund can also deploy inflection capital due to the cyclical nature of the insurance market, which takes advantage of capital dislocations. For example, the GP is spending a lot of time in the excess and surplus (E&S) market.

It is less interested in sectors and assets that have been dominated by or previously owned by other GPs, with Popoli highlighting insurance distribution as one where valuations will likely be too high to play.

Bain has already made three deals via the fund, which have all been control deals. It formed Aptia via the carve-out of the US employee benefits administration and UK pension businesses of Marsh McLennan [NYSE:MMC]. It also launched German brokerage platform Summitas Gruppe via a joint venture and US-based digital health and care navigation platform Enhance Health.