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Here’s How the $214M AAM Buyout Deal Will Help Sun Life Financial (TSE:SLF)

Story Highlights

Sun Life Financial is witnessing solid demand for its alternative investment capabilities. The buyout is expected to help the company in expanding its footprint in the high-net-worth and ultra-high-net-worth markets of the U.S.

Canadian financial services company Sun Life Financial Inc. (TSE:SLF) (NYSE:SLF) recently announced its plans to buy a 51% stake in U.S.-based retail distribution firm Advisors Asset Management, Inc. (AAM) for $214 million (nearly C$280 million). The deal is expected to help SLF expand in the rapidly growing high-net-worth and ultra-high-net-worth markets of the U.S.

The buyout will take place through Sun Life Financial’s global institutional asset manager SLC Management. Post the deal, AAM will act as SLC Management’s U.S. retail distribution arm.

Sun Life will also get a put/call option to purchase the remaining 49% stakes of AAM in 2028. Subject to customary closing conditions, the deal is projected to conclude in the first half of 2023.

Further, Sun Life will invest up to $400 million to introduce SLC Management alternative products for the U.S. retail market, which will be distributed by AAM.

Is SunLife Stock a Good Buy?

SunLife Financial stock seems like a decent option to grab. Analysts on TipRanks are cautious but optimistic about SLF stock, which carries a Moderate Buy consensus rating based on four Buys and four Holds.

Further, TipRanks data shows that financial bloggers are 100% Bullish on SLF stock, compared to the sector average of 68%. Retail investors, too, look positively inclined toward the stock as they have increased their holdings in SLF by 2.3% in the last 30 days.

According to TipRanks, SLF stock carries a ‘Perfect 10’ Smart Score, which indicates that it has strong potential to outperform the market.

Final Thoughts

Sun Life Financial has already been witnessing solid demand for its alternative investment capabilities. SLC Management exited the second quarter of 2022 with assets under management of $194 billion. Moreover, SLF’s average price forecast of C$70.25 implies 22.2% upside potential from the current level.

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