Vida Capital, ILS manager Merion Square’s JV partner, to be acquired

Vida Capital, Inc., an alternative asset manager focused on non-correlating investment classes and a joint-venture partner in insurance-linked securities (ILS) asset manager Merion Square Capital LLC, is being acquired.

RedBird Capital Partners and Reverence Capital Partners have teamed up to enter into a definitive agreement to acquire Vida Capital, Inc.

The Vida Capital leadership, including President and CEO Jeff Serra and members of the management team, are set to invest alongside RedBird and Reverence in the transaction, which is expected to close by the fourth quarter of the year, subject to regulatory approvals and closing conditions.

Financial terms of the transaction were not disclosed.

While it seems RedBird and Reverence have clearly been attracted to Vida’s focus on diversifying asset class management, its specialism in longevity linked life settlements and the expertise of its team, this also seems to be an arrangement designed to position Vida for further growth, especially as the leadership are co-investing in the deal.

Vida Capital has a history of specialising in insurance-linked strategies, with a predominant focus on longevity-contingent risk.

We covered Vida’s interests in longevity linked assets around a year ago, when the firm announced a capital raise for a longevity focused life settlements investment strategy.

Vida Capital then recognised an opportunity to branch out into the non-life insurance-linked securities (ILS) space, partnering with ILS and collateralized reinsurance specialists Rewire Holdings LLC, to build a diversifying non-correlated platform focused on insurance-linked securities (ILS) in other classes of risk and peril.

That platform is called Merion Square Capital LLC, which was launched in December 2018 as a new insurance-linked securities (ILS) fund manager with $150 million of initial capital commitments.

The launch saw ILS asset manager Merion Square Capital bringing an open-ended fund structure to invest primarily in ILS and reinsurance linked securities, with an emphasis on property and casualty insurance risks, annuities and also mortality linked contracts.

The joint-venture brings together the ILS and reinsurance expertise of the Rewire Holdings team, along with Vida Capital’s expertise as a dedicated institutional asset manager of alternative insurance related assets.

There is not expected to be any change to the joint-venture relationship due to this acquisition of Vida Capital, except that Vida will have new owners when the transaction closes.

If anything, the new injection of capital, backing and demonstration of confidence in Vida will benefit the Merion Square ILS team as well, providing them with broader access to institutional markets and a larger platform for marketing their reinsurance linked strategies.

The investment from RedBird and Reverence will offer Vida Capital greater financial and operational resources to continue building out its proprietary analytical capabilities and expanding its product set as well.

Vida currently has $4.2 billion in assets under management and is the largest fully-integrated independent life settlements manager in North America.

Jeff Serra, Vida CEO and Founder, commented on the news, “Our management team and employees are excited to work closely with Reverence and RedBird to continue our growth and success in the life settlements space. Both firms have proven to be thoughtful partners who thoroughly understand our business and share our commitment to expanding our platform and investing in processes that will enable us to deliver market leading returns. Our company’s industry leadership is a testament to the commitment and vision of our limited partners with whom we have had a successful long-term investing relationship. As we move forward with our new partners, our emphasis on LP satisfaction will remain core to our business and investment philosophy. In addition, for 10 years we have enjoyed a great partnership with Austin Ventures, who believed in our idea from the very beginning and provided the resources and support to enable us to make this all happen.”

“We are very attracted to Vida due to the strength of the team and platform, and as the firm is a leader in the life settlements space,” added Milton Berlinski, Managing Partner of Reverence Capital Partners. “We believe asset managers such as Vida are well suited to capitalize on the shift in demand for life settlements. In addition, we believe success in the life settlements space requires prudent diligence and effective risk management, which are Vida’s most significant core competencies.”

“Vida is an entrepreneurial asset management platform that we have been watching closely for quite some time. Jeff and the Vida team have built an industry leader in a relatively short period of time – from an idea in 2009 to the largest vertically integrated asset manager in the life settlements industry,” explained Gerry Cardinale, Managing Partner of RedBird Capital Partners. “We have been in discussions with Jeff and his senior leadership team for some time – the objective of the partnership is to support their continued returns performance, while also enabling the expansion into new asset management products that leverage the team’s underwriting expertise in non-correlated duration investment strategies. We are also looking forward to working with my former Goldman Sachs partners, Milton Berlinski and Peter Aberg, both of whom bring tremendous financial services expertise to our collective investment underwriting.”