KKR said it has agreed to buy the remaining 37% stake in Global Atlantic Financial for $2.7 billion in an all-cash transaction.
The 100% ownership of the insurance company is thought to be additive to the firm’s perpetual capital, which boosts its fee-paying assets. The transaction is expected to close in the first quarter of 2024.
Last year, AW Research found that among the five of the largest publicly traded firms, including KKR, perpetual assets account for between 29% to over 60% of assets. Insurance assets make up the majority of the growing perpetual capital business thanks to aging demographics, but the sizable benefit for large private equity firms is access to more permanent capital that can be invested for durations much longer than the typical five-year fund life.
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 grown significantly, up from $72 billion in 2020 to $158 billion today.
Officials said 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 relying on KKR’s global reach to establish new business relationships in Hong Kong, Singapore and Japan.
“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,” said KKR Co-CEOs Joe Bae and Scott Nuttall, in a statement. “We expect the new ownership structure will foster even closer collaboration, allowing us to fully leverage our complementary strengths and grow faster together.”
Contingent on the closing of the deal, KKR will unveil a new business segment called Strategic Holdings. The new segment will principally be comprised of KKR’s Core Private Equity balance sheet holdings. Core Private Equity has grown to $35 billion of assets under management, including $6.5 billion of assets on KKR’s balance sheet. Given the maturation and strong performance of these companies, KKR expects to begin receiving more recurring cash dividends from this segment of the balance sheet.
Officials added that Global Atlantic has been 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.
After closing, Global Atlantic will continue to be led by its management team and operate under the Global Atlantic brand.