KKR to acquire Global Atlantic in $4.4bn “strategic transaction”

October 2020 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

October 2020 Issue

In a “strategic” transaction which strengthens its leadership in the retirement and life insurance markets, Global Atlantic Financial Group Limited is to be acquired by global investment company KKR & Co. Inc. for $4.4bn.

Under the terms of the agreement, KKR will fund the acquisition of Global Atlantic via a combination of cash on hand, proceeds from potential minority co-investors and the issuance of new debt or equity. The investment in Global Atlantic will be held on KKR’s balance sheet and through a proprietary vehicle.

One of the largest fixed rate and fixed indexed annuity providers in the US, Global Atlantic serves more than two million policyholders through its retirement and life insurance products – offering annuities for individuals through a network of banks, broker-dealers, and insurance agencies as well as life insurance for individuals and corporates.

Global Atlantic is also a leader in the institutional channel, providing customised reinsurance solutions to its life and annuity company clients. The firm has a history of innovation and growth, including expanding through mergers and acquisitions.

“We are thrilled to have a new, long-term partner in KKR,” said Allan Levine, chairman and chief executive of Global Atlantic. “With its global presence, investment acumen and long-term focus, we believe we will be even better positioned – financially and strategically – both to help Americans address the financial challenges they face today and to help our institutional channel clients achieve their strategic, risk, and capital management goals.”

After closing, Global Atlantic will continue to operate as a separate business with its existing brands and management team. Furthermore, the firm will continue to be run by its existing senior leadership team led by Mr Levine.

“This is a transformative event for KKR,” said Henry Kravis and George Roberts, co-chairmen and co-chief executives of KKR. “Global Atlantic is a best-in-class business with a like-minded entrepreneurial management team. Our businesses are complementary, and our partnership will benefit all of our collective stakeholders.”

KKR also plans to serve as Global Atlantic’s investment manager subject to receipt of applicable regulatory approvals. In turn, Global Atlantic will gain access to KKR’s leading direct origination platforms and asset management capabilities while maintaining its current high-quality bias and investment-grade focus.

“This transaction is highly strategic for KKR — it meaningfully expands our base of permanent capital, further diversifies and scales our business, and significantly grows our position within the insurance industry, which has been increasing its exposure to alternative investment strategies,” added Joseph Bae and Scott Nuttall, co-presidents and co-chief operating officers of KKR. “Insurance providers play a critical role in supporting the financial security for millions of individuals.”

The global insurance industry, with over $30 trillion of assets, is certainly a key strategic focus for KKR. The acquisition of Global Atlantic represents a significant and natural extension of KKR’s existing insurance business, which includes managing $26bn of assets on behalf of insurance companies across the firm’s strategies and products.

The transaction, which is expected to close in early 2021, is subject to required regulatory approvals and certain other customary closing conditions.

KKR was advised by Simpson Thacher & Bartlett LLP and Willkie Farr & Gallagher LLP. Debevoise & Plimpton LLP acted as legal adviser to Global Atlantic.

Mr Bae and Mr Nuttall concluded: “This transaction positions KKR to support Global Atlantic policyholders through our global network and asset management and origination capabilities.”

Fraser Tennant