Sixth Street inks $5.1 billion take-private purchase of insurer Enstar

(Reuters) -Investment firm Sixth Street will acquire Enstar for $5.1 billion, in a deal backed by former Treasury Secretary Steven Mnuchin and billionaire J Christopher Flowers, the insurer said on Monday.

Sixth Street — an existing Enstar investor with a nearly 4.7% stake — will offer $338 per share in cash, implying about a 3% discount to the stock's closing price on Friday. Shares of the insurer fell nearly 6%.

Insurers manage huge pools of capital, thanks to the premiums they collect from customers. They have emerged as a lucrative buyout target for asset-hungry private equity and alternative asset managers in the recent years.

Truist Financial completed the sale of its insurance brokerage business to an investor group, including Stone Point Capital and CD&R, in a $15.5 billion deal in May.

Such tie-ups can also boost the investment returns for insurers by allowing them to take advantage of the private equity firms' expertise in navigating the financial markets.

Enstar said Mnuchin's Liberty Strategic Capital, J.C. Flowers and other institutional investors have agreed to participate in the deal, expected to close in mid-2025.

The insurer is also allowed a 35-day "go-shop" period, expiring on Sept. 2, in which it can seek alternative acquisition offers.

Goldman is advising Enstar, while Ardea Partners, Barclays and J.P. Morgan Securities are the advisers to Sixth Street.

Sixth Street manages more than $75 billion of assets and has invested in businesses ranging from Airbnb to Bay FC, a professional women's soccer franchise.

Separately, Enstar reported a 52% jump in its adjusted profit for the quarter ended June 30.

(Reporting by Niket Nishant in Bengaluru; Editing by Shilpi Majumdar)