KKR buys Global Atlantic, adding almost $90 billion in assets
KKR & Co. agreed to buy Global Atlantic Financial Group in a deal that gives it a major presence in the insurance industry and adds long-term capital.
The alternative-investment manager will acquire Global Atlantic’s outstanding shares, according to a statement released Wednesday, in a transaction that could be valued at more than $4 billion. Global Atlantic, which was founded within Goldman Sachs Group Inc. in 2004 and became independent in 2013, had more than 2 million policyholders through its retirement and life insurance products and almost $90 billion in assets as of March 31.
KKR’s rivals have been building out their own insurance arms in recent years and have brought on executives who can help them attract more business. Insurers are facing historically low yields in fixed-income markets. Apollo Global Management Inc. helped turn annuity seller Athene Holding Ltd. into a business with a market value of $5.8 billion, and funds affiliated with Blackstone Group Inc. teamed up with other investors in 2017 to buy Fidelity & Guaranty Life.
“This is a transformative event for KKR,” said Henry Kravis and George Roberts, co-chief executive officers of the New York-based firm. “Our businesses are complementary and our partnership will benefit all of our collective stakeholders.”
KKR will pay the insurer’s book value at the date of closing, subject to an “equity roll-over” for certain existing shareholders, according to the statement. Global Atlantic’s book value was about $4.4 billion at the end of March.
The purchase is expected to be completed in early 2021. Global Atlantic will then operate as a separate business with its current management team, headed by CEO Allan Levine.
KKR already manages $26 billion of assets on behalf of insurers. The deal also increases what private equity firms refer to as “permanent capital,” coveted funds they don’t have to give back to investors in a few years.
Global Atlantic offers annuities for individuals through banks, broker-dealers and insurance agencies as well as life insurance. The company is also in the reinsurance business for life and annuity clients.
KKR expects to fund the acquisition, net of the equity roll-over, from a combination of cash, proceeds from potential minority co-investors and the issuance of new debt or equity.