Aflac Global Investments, the asset management subsidiary of Aflac Incorporated, announced it has entered into a definitive agreement to purchase a significant non-controlling minority interest in Varagon Capital Partners, L.P. (Varagon), a direct lending asset manager that has made over $14.5 billion of financing commitments as of December 31, 2019. In addition, Aflac Global Investments is making a multi-year commitment to build a portfolio of up to $3.0 billion of middle market loans on behalf of Aflac Japan and Aflac U.S., subject to additional terms and conditions.

Aflac Incorporated Executive Vice President, Global Chief Investment Officer and President of Aflac Global Investments Eric M. Kirsch commented: "We are pleased to announce this strategic partnership with Varagon as part of our growth strategy for Aflac Global Investments. This investment supports our strategic asset allocation and leverages our external management platform to create enhanced value for Aflac and our stakeholders. It allows us to diversify our revenue streams and participate in the growth of a leading asset manager in an important and growing segment of the private markets. Middle market loans are a strategically important asset class for Aflac, as is the ability to leverage our capital to grow a quality asset management franchise."

"Varagon is very pleased to establish this strategic partnership with Aflac Global Investments," said Walter J. Owens, Varagon's CEO. "We appreciate the recognition of our expertise as an asset manager. This partnership will allow us to further build on our proven broad-based direct origination capability and rigorous underwriting process while meeting the needs of our borrowers for proprietary middle market corporate loans."

Bradley E. Dyslin, Aflac Global Investments senior managing director, global head of credit and strategic investment opportunities and co-head of the external manager platform, commented: "Varagon shares our core investment principles, which are grounded in deep fundamental credit research. They have built a strong platform based on thoughtful and disciplined credit underwriting standards consistent with our investment philosophy. We are thrilled to partner with their expertise as we build toward our long-term strategic asset allocation for private direct lending through a tactical approach across market cycles."

The transaction does not have a material impact on Aflac Incorporated's recently articulated 2020 capital deployment plans or overall capital and liquidity position and is expected to close in the first quarter of 2020, subject to customary regulatory and other closing terms.

Rothschild & Co served as financial advisor, and Debevoise & Plimpton as legal advisor, to Aflac Global Investments. Wells Fargo Securities served as financial advisor and Davis Polk & Wardwell served as legal advisor to Varagon.