PE firm KKR is set to acquire the remaining 37% stake in Global Atlantic, which it does not currently own, for approximately US$2.7 billion in cash. This strategic transaction is expected to support asset and fee income growth and further strengthen KKR's position in the insurance industry. The transaction is expected to close in the first quarter of 2024.
Global Atlantic specialises in offering pension and life insurance products to its policyholders. Originally founded by investment bank Goldman Sachs in 2004, the company became a separate entity in 2013. KKR is buying the remaining stake at a valuation of Global Atlantic of more than $7 billion - a significant increase from its acquisition of a majority stake in February 2021 at a valuation of $4.4 billion. The sharp rise in the life insurer's valuation corresponds to a significant increase in its total assets, which have more than doubled to US$158 billion since 2020, subsequently increasing its book value.
KKR will use its free cash, which totaled $23 billion as of Sept. 30, to finance the transaction. KKR's strategy since going public in 2009 has been different from that of its competitors, such as Blackstone. Instead of distributing most of its profits to shareholders as dividends, KKR retains the profits, which allows reinvestment in acquisitions and supports the growth of a significant number of investment assets.