KKR buys out remaining shareholders of Global Atlantic
A giant investment company is buying the shares it does not already own in long term re/insurer Global Atlantic Financial Group for an estimated $2.3 billion.
KKR & Co said it was buying the remaining 37% in GAFG, which has its holding company in Bermuda, in order to collaborate more closely with the re/insurer.
KKR bought a 60% stake in GAFG in 2021, which valued the company at the time at $4.7 billion. At the time it also became GAFG’s asset manager.
Based on the purchase price of the minority stake, GAFG is now valued at $6.2 billion.
Joe Bae and Scott Nuttall, co-chief executive officers of KKR, said: “The strategic partnership we envisioned three years ago has exceeded our expectations. It has been transformative for both businesses and a great cultural fit that has enabled us to contribute to Global Atlantic’s continued strong performance and success, while also being a key driver of growth for KKR.
“We expect the new ownership structure will foster even closer collaboration, allowing us to fully leverage our complementary strengths and grow faster together.”
Allan Levine, chief executive officer of GAFG, said: “We are taking this step because we have demonstrated, over the last three years, that we are stronger together. Being part of KKR has strengthened our position as a leading insurance company and enhanced our ability to deliver compelling solutions for our clients.
“Moving from a diverse group of shareholders to a single one with KKR clarifies our objectives and allows us to think ― and invest ― longer term,” said Allan Levine, chief executive officer of Global Atlantic. “Although we hope to unlock further value by taking this step in our capital structure, neither our client-first approach nor our investment and risk management framework will change, and the day-to-day experience of our clients and colleagues will feel very much the same as it does today.”
GAFG said its assets under management had grown significantly, up from $72 billion in 2020 to $158 billion today. As Global Atlantic has grown, it has benefited from the scale of KKR’s asset management businesses in meeting GA’s investment needs while maintaining a focus on risk management and continuing to deliver market-leading returns. The strategic partnership has proven to be both an important source of capital for Global Atlantic and a driver of international growth, with Global Atlantic leveraging KKR’s global reach to establish new business relationships in Hong Kong, Singapore and Japan.
“At the same time, Global Atlantic has been a source of financial success for KKR and a key element of KKR’s growing real estate credit and asset-based financing businesses, both of which manage assets that are particularly well suited for insurance company balance sheets,” the company said.
After closing, Global Atlantic will continue to be led by its management team and operate under the Global Atlantic brand.
Under the terms of the agreement, KKR will pay Global Atlantic’s minority shareholders an amount in cash equal to 1.0x Global Atlantic’s book value with certain adjustments. The total cash purchase price is currently estimated to be approximately $2.7 billion. Global Atlantic management is expected to exchange a majority of its Global Atlantic equity interests for KKR equity. KKR will fund the transaction from its balance sheet, which had $23 billion of cash and investments as of September 30, 2023.
The transaction, which is expected to close in the first quarter of 2024, is subject to customary closing conditions.
Simpson Thacher & Bartlett LLP and Debevoise & Plimpton LLP acted as legal advisors to KKR and Global Atlantic, respectively. Barclays provided a fairness opinion for Global Atlantic.
