Mubadala and co-investors buy 20% stake in US insurance broker Truist for $1.95 billion

The deal values the unit of Truist Financial Corporation at $14.75 billion

Truist Financial Corporation will retain 80 per cent of Truist Insurance Holdings after the deal closes. Bloomberg

Abu Dhabi’s sovereign investment arm Mubadala Investment Company, private equity firm Stone Point Capital and other investors have bought a 20 per cent stake in US insurance broker Truist Insurance Holdings for $1.95 billion.

The deal values the sixth-largest insurance broker in the US and a unit of Truist Financial Corporation at $14.75 billion, Mubadala said on Tuesday.

The company's valuation includes a common equity value of $9.75 billion and $5 billion of inter-company preferred equity issued by Truist Insurance Holdings to Truist, Truist Insurance Holdings said.

US commercial and investment bank Truist Financial Corporation will retain 80 per cent of Truist Insurance Holdings after the deal closes in the second quarter of 2023, Mubadala said.

“Truist Insurance Holdings is a very attractive business with a leadership position in US insurance distribution, and has generated a consistently strong financial performance,” said Luca Molinari, head of financial services at Mubadala.

Mubadala has teamed up with Stone Point, Truist and the management team of Truist Insurance Holdings to “enable the business to accelerate in its growth trajectory”, he said.

Mubadala, which is at the centre of the UAE's efforts to diversify its economy, manages more than $284 billion in assets globally.

In recent years, it has stepped up its investment in health care, technology, mobility, clean energy and life sciences as it expands its portfolio.

In July 2022, Berlin-based digital insurance company Wefox raised $400 million in a Mubadala-led investment round to help it grow across Europe and new markets in the US and Asia.

Based in Charlotte, North Carolina, Truist Insurance Holdings operates more than 250 offices through its wholesale, retail and insurance services divisions, according to its website.

The investment shows “the significant value of Truist Insurance Holdings and strategically positions it, and Truist, for long-term success”, Truist chairman and chief executive Bill Rogers said separately.

John Howard, Truist Insurance Holdings' chairman and chief executive, said the investment would position the insurance unit for growth as it continues to expand its portfolio and invest in digital technology.

“We operate in an attractive, growing and dynamic industry in which scale is critical to remain competitive,” he said.

Truist Insurance Holdings is a diversified US retail and wholesale insurance distribution platform that has recorded “strong growth, both organically and through a disciplined acquisition strategy,” said Chuck Davis, chief executive of Stone Point.