KKR to acquire Global Atlantic Financial Group for $4.4B

Source: IBS Intelligence 2020-07-09

KKR & Co., a leading global investment firm has announced that the firm has entered into a definitive agreement with Global Atlantic Financial Group Limited, a leading retirement and life insurance company, to acquire all of its outstanding shares. The transaction is expected to close by early 2021, subject to regulatory approvals and customary closing conditions.

Global Atlantic serves over 2 million policyholders through its retirement and life insurance products. The firm is among the largest fixed rate and fixed indexed annuity providers in the U.S., offering annuities for individuals through a network of banks, insurance agencies and broker-dealers as well as life insurance for individuals and corporates. Global Atlantic is also a leading player in the institutional channel, providing customised reinsurance solutions to its life and annuity company clients.

According to the agreement, Global Atlantic will continue to operate as a separate business with its existing brands and management team. KKR is expected to pay Global Atlantic shareholders an amount equal to 1.0x Global Atlantic’s Book Value as of the date of closing, subject to an equity roll-over. KKR is planning to fund from a combination of cash, proceeds from potential minority co-investors and the issuance of new debt and/or equity.

“We are thrilled to have a new, long-term partner in KKR. 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,” said Allan Levine, Chairman and Chief Executive Officer of Global Atlantic.

Strategic Rationale includes:

Best-in-class business with a strong management team: Global Atlantic’s business has delivered industry-leading financial results. Adjusted Operating Earnings and Book Value have compounded at annual growth rates of 17% and 16%, respectively, from 2016 to 2019,

Global Atlantic policyholders to benefit from KKR’s asset management and origination capabilities: KKR is planning to serve as Global Atlantic’s investment manager subject to regulatory approvals,

Significant expansion of strategically important growth vertical: The acquisition marks a significant and natural extension of KKR’s existing insurance business, which includes managing $26 B of assets on behalf of insurance companies across strategies and products,

Significantly increases permanency of assets under management (AUM) and growth.

Enhances book value compounding opportunity: Through Global Atlantic, KKR is planning to focus on building, growing and compounding its permanent capital base on behalf of its shareholders.

Accretive to KKR shareholders across key metrics: After one-year post-closing, the transaction is expected to be accretive to KKR shareholders on an AUM, FPAUM, Fee Related Earnings, Book Value, and After-tax Distributable Earnings per Adjusted share basis.

Recently, Xalles acquired 1Rivet Global, the International division of 1Rivet.

“This is a transformative event for 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,” said Henry Kravis and George Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR.

Established since 1976, KKR is a leading global investment firm managing multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds. The firm invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business.

KKR to acquire Global Atlantic Financial Group for $4.4B

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