SAF Group is charging into a corner of private credit long dominated by

Apollo Global Management Inc.

and

Brookfield Corp.

, launching an insurance-backed investment vehicle to fuel lending to borrowers starved of flexible financing. If followed by others, the move could help redraw the contours of the Canadian private credit market.

The Calgary-based firm, led by Ryan Dunfield, has partnered with American Life & Security Corp., a Nebraska-based life annuity provider, and the private capital solutions unit of GQG Partners, a US$172 billion global investment manager, to create a reinsurance vehicle that gives it control of about $2 billion to $2.5 billion. The structure, which has the option to expand, was funded with roughly $250 million in regulatory capital, according to Dunfield.

“It gives you the closest thing to permanent capital,” he said in an interview.

Under the arrangement, SAF will invest the assets in partnership with Antarctica Investment Advisors, a firm associated with American Life. The capital will support loans ranging from $15 million to $250 million to borrowers that rarely have access to flexible financing — such as evergreen

private equity funds

, mortgage investment corporations,

real estate

mortgage pools, auto-loan portfolios and other private-credit managers, he said.

Dunfield said the new capital expands the firm’s capacity but does not change its strategy, which remains focused on the Canadian middle market.

Insurance capital has become one of the most important funding sources for private credit globally. Apollo helped pioneer the model more than a decade ago by turning annuity provider Athene into a major base of long-term assets that could be invested in private loans. Brookfield is now embracing the same strategy, with chief executive Bruce Flatt telling shareholders that the company is evolving into an investment-led insurer.

But while the likes of Apollo and Brookfield have long used insurance affiliates to scale private credit, SAF’s move is notable precisely because of its more limited size. It is the first mid-sized Canadian credit manager to use a reinsurance structure of this kind, following similar steps by firms such as Crestline Investors in the U.S.

“It gives us the same kind of tools the larger U.S. firms use, but focused on Canadian borrowers,” Dunfield said.

His firm’s advance comes amid deepening strains in parts of the Canadian private credit and equity market. Several funds, including those run by Kensington Capital Partners and Trez Capital, in recent months have restricted investor withdrawals due to liquidity pressures.

Part of Dunfield’s business is lending to some of the funds that face those liquidity constraints, he said. But the firm’s exposure is limited to senior-secured loans backed by large diversified pools of capital, including mortgages or loans, often at loan-to-value ratios below 10 per cent.

“We partnered with SAF because we believe they are uniquely organized and staffed to capitalize on opportunities in Canadian credit markets, where borrowers face limited options outside of banks,” GQG Private Capital Solutions said in an e-mailed statement.

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The Canadian market remains attractive relative to the U.S., with private-credit deals generally yielding 100 to 200 basis points more than comparable transactions south of the border, Dunfield said. That gap reflects a less crowded lender universe and the fact that Canadian companies typically operate with more conservative leverage levels because the market relies more heavily on traditional bank funding, he said.

Founded in 2014, SAF has generated structured returns above 16 per cent annually. The firm employs about 40 people across offices in Calgary, Toronto and Vancouver. “We want companies across the country to know: if you need capital, we’re here,” Dunfield said.

Bloomberg.com