All proceeds will be used to fund additional growth for Canyon, with the agreement also including a commitment from Dai-ichi to provide at least $1.3 billion of new capital to Canyon’s funds.

The deal grants Dai-ichi the right to increase its position to a 51 percent majority stake in 2027, along with an option to purchase the reminder of the firm in 2029.

Canyon’s current management team will continue to lead the business, with co-founders Josh Friedman and Mitch Julis committing to remain active for at least another five years. With both co-founders now well into their 60s, the Dai-ichi agreement sets a clear succession roadmap for the firm.

The deal is expected to close sometime in Q2 and involves the formation of a new holding company that will oversee the Canyon assets. Dai-ichi will appoint two directors to the holding company's board.

This week’s agreement caps off a lengthy process, with Bloomberg first reporting on the firm’s plans to market a minority stake sale in 2022. At the time, Canyon’s real estate head had recently announced her retirement and a group of prominent partners had departed in quick succession.

 

The Firm
Canyon employs a deep value-oriented strategy, investing across public and private corporate credit, structured credit, and direct real estate lending, with a preference for complex or opportunistic situations.

Speaking with Institutional Investor in 2014, Julis summarized his approach: “We look to anticipate or precipitate the next change of a complex balance sheet and participate in that change.”

The strategy aligns with Friedman and Julis’ shared background. Prior to launching Canyon, both founders spent time at junk bond birthplace Drexel Burnham Lambert, with Friedman serving as Director of Capital Markets for High Yield and Private Placements and Julis managing a group of investors focused on distressed and special situation securities.

 

Dai-ichi’s Angle
For Dai-ichi, the agreement provides an entry into the increasingly hot private credit market. It also comes at a time when many private equity firms are making insurance acquisitions of their own, seeking out a source of cheap, perpetual capital (Apollo/Athene, Carlyle/Fortitude Re, KKR/Global Atlantic, etc.). In the US, private capital now holds around a tenth of the entire life insurance market, managing more than $850 billion in assets.

Dai-ichi’s reversal of this trend is somewhat less common.