KKR & Co. Inc. announced Wednesday it agreed to buy a 37 percent stake of insurance company Global Atlantic for $2.7 billion, increasing its ownership to 100 percent.
Simpson Thacher & Bartlett is advising KKR with a team led by M&A partners Christopher May in Houston and Jihyun Chung in New York and capital markets partner Joseph Kaufman in New York.
Debevoise & Plimpton counseled Global Atlantic and Barclays provided a fairness opinion on the deal.
The transaction should close in the first quarter of next year.
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 in cash and investments as of Sept. 30.
Since 2021, KKR has served as Global Atlantic’s asset manager, offering access to its global investment and origination capabilities for the benefit of GA’s policyholders. Global Atlantic’s assets under management have more than doubled up, from $72 billion in 2020 to $158 billion in 2023.
The strategic partnership has proven to be 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, KKR said. Global Atlantic also has been a source of financial success for KKR and a key element of KKR’s expanding real estate credit and asset-based financing businesses, which manage assets well suited for insurance company balance sheets.
Joe Bae and Scott Nuttall, co-CEO’s of KKR, said in a statement that the strategic partnership KKR envisioned three years ago exceeded their 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,” they said. “We expect the new ownership structure will foster even closer collaboration, allowing us to fully leverage our complementary strengths and grow faster together.”
After closing, Global Atlantic will continue to be led by its management team and operate under the Global Atlantic brand.
Allan Levine, CEO of Global Atlantic, said the company is taking this step because it’s demonstrated that it is stronger with KKR.
“Being part of KKR has strengthened our position as a leading insurance company and enhanced our ability to deliver compelling solutions for our clients,” he said. “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.”
KKR also announced a series of other strategic initiatives contingent on the closing of the Global Atlantic transaction, including creating a new business segment called Strategic Holdings, modifying its compensation structure to be more success-based and introducing a new reporting framework. KKR expects the deal to be accretive to all of its per share earnings metrics.