Closer Coordination and Alignment Expected to
Further Accelerate Growth of Both KKR and Global Atlantic
KKR Announces Other Strategic Initiatives to
Benefit Shareholders
KKR and Global Atlantic to Host a Conference
Call at 10:00 a.m. EST
KKR & Co. Inc. (NYSE: KKR) and Global Atlantic Financial
Group LLC (“Global Atlantic” or “GA”) today announced a definitive
agreement under which KKR will acquire the remaining 37% stake of
leading insurance company Global Atlantic, increasing KKR’s
ownership to 100%.
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Joe Bae and Scott Nuttall, Co-Chief Executive Officers of KKR,
stated: “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. We expect
the new ownership structure will foster even closer collaboration,
allowing us to fully leverage our complementary strengths and grow
faster together.”
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. 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 leveraging
KKR’s global reach to establish new business relationships in Hong
Kong, Singapore and Japan.
At the same time, Global Atlantic has been a source of financial
success for KKR and 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.
“We are taking this step because we have demonstrated, over the
last three years, that we are stronger together. Being part of KKR
has strengthened our position as a leading insurance company and
enhanced our ability to deliver compelling solutions for our
clients. 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,” said Allan Levine, Chief Executive Officer of
Global Atlantic. “Although we hope to unlock further value by
taking this step in our capital structure, neither our client-first
approach nor our investment and risk management framework will
change, and the day-to-day experience of our clients and colleagues
will feel very much the same as it does today.”
After closing, Global Atlantic will continue to be led by its
management team and operate under the Global Atlantic brand.
Transaction Details
Under the terms of the agreement, KKR will pay Global Atlantic’s
minority shareholders an amount in cash equal to 1.0x Global
Atlantic’s book value with certain adjustments. The total cash
purchase price is currently estimated to be approximately $2.7
billion. 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 of cash and investments as of September 30, 2023.
The transaction, which is expected to close in the first quarter
of 2024, is subject to customary closing conditions.
Simpson Thacher & Bartlett LLP and Debevoise & Plimpton
LLP acted as legal advisors to KKR and Global Atlantic,
respectively. Barclays provided a fairness opinion for Global
Atlantic.
Strategic Initiatives
KKR also announced a series of other Strategic Initiatives that
are contingent on the closing of the Global Atlantic transaction.
These include:
- Creating a new business segment, Strategic Holdings. The
new segment will principally be comprised of KKR’s Core Private
Equity balance sheet holdings. Core Private Equity has scaled into
a business with $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.
- Modifying its compensation structure to be more success
based. KKR will draw a greater share of compensation from
carried interest instead of fee related earnings. The adjustment is
expected to result in enhanced shareholder value by delivering more
of the firm’s recurring revenues to shareholders.
- Introducing a new reporting framework. KKR will report a
new key metric, Total Operating Earnings, which will be comprised
of Fee Related Earnings, Strategic Holdings and Insurance Operating
Earnings. KKR expects Total Operating Earnings will highlight the
growth of its more recurring earnings streams.
KKR expects the Strategic Initiatives, combined with the
expanded ownership of Global Atlantic, to be accretive to all of
its per share earnings metrics.
Bae and Nuttall added: “We remain focused on performing through
cycles for the millions of clients and policyholders counting on us
— with a business model that allows us to compound earnings and
value for the very long term while retaining our culture. Today’s
announcements are in service of that vision — more fully
establishing three avenues for long term sustained growth, further
increasing our optimism about the path ahead.”
Conference Call Information and Additional Details
KKR is holding a conference call to discuss the Global Atlantic
transaction and Strategic Initiatives on November 29 at 10:00 a.m.
EST. Allan Levine, Chief Executive Officer of Global Atlantic, will
join the call. The conference call may be accessed through the
Investor Relations section of KKR’s website at ir.kkr.com or by
dialing 1-877-407-0312 (U.S.) or 1-201-389-0899 (non-U.S.); a pass
code is not required. Supplemental materials that will be discussed
during the call will be available at the same website location.
A replay of the webcast will be available on KKR’s website
approximately one hour after completion of the broadcast.
About KKR
KKR is a leading global investment firm that offers alternative
asset management as well as capital markets and insurance
solutions. KKR aims to generate attractive investment returns by
following a patient and disciplined investment approach, employing
world-class people, and supporting growth in its portfolio
companies and communities. KKR sponsors investment funds that
invest in private equity, credit and real assets and has strategic
partners that manage hedge funds. KKR’s insurance subsidiaries
offer retirement, life and reinsurance products under the
management of Global Atlantic Financial Group. References to KKR’s
investments may include the activities of its sponsored funds and
insurance subsidiaries. For additional information about KKR &
Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com.
For additional information about Global Atlantic Financial Group,
please visit Global Atlantic Financial Group’s website at
www.globalatlantic.com.
About Global Atlantic
Global Atlantic Financial Group is a leading insurance company
meeting the retirement and life insurance needs of individuals and
institutions. With a strong financial foundation and risk and
investment management expertise, the company delivers tailored
solutions to create more secure financial futures. The company's
performance has been driven by its culture and core values focused
on integrity, teamwork, and the importance of building long-term
client relationships. Global Atlantic is a majority-owned
subsidiary of KKR, a leading global investment firm. Through its
relationship, the company leverages KKR's investment capabilities,
scale and access to capital markets to enhance the value it offers
clients.
Forward-Looking Statements
This press release contains certain forward-looking statements.
Forward-looking statements relate to expectations, estimates,
beliefs, projections, future plans and strategies, anticipated
events or trends and similar expressions concerning matters that
are not historical facts, including but not limited to the
statements with respect to: the transaction (including the
estimated total cash purchase price) to acquire all outstanding
shares of Global Atlantic; operation of Global Atlantic following
the closing of the transaction; expansion and growth opportunities
and other synergies resulting from the transaction; the
availability of cash on hand or liquidity from KKR’s investment
portfolio to fund the transaction; and expected timing of closing.
The forward-looking statements are based on KKR’s beliefs,
assumptions and expectations, taking into account all information
currently available to it. These beliefs, assumptions and
expectations can change as a result of many possible events or
factors, not all of which are known to KKR or are within its
control. If a change occurs, KKR’s business, financial condition,
liquidity and results of operations, including but not limited to
dividends, reported earnings, and capital structure may vary
materially from those expressed in the forward-looking statements.
The following factors, among others, could cause actual results to
vary from the forward-looking statements: failure to realize the
anticipated benefits within the expected timeframes from the
planned transaction with Global Atlantic; unforeseen liabilities or
integration and other costs of the Global Atlantic transaction and
timing related thereto; availability and cost of financing to fund
the transaction; changes in Global Atlantic’s business; any delays
or difficulties in receiving regulatory approvals; failure to
complete the transaction; distraction of management or other
diversion of resources within each company caused by the
transaction; retention of key Global Atlantic employees; Global
Atlantic’s ability to maintain business relationships following the
transaction; the volatility of the capital markets; failure to
realize the benefits of or changes in KKR’s or Global Atlantic’s
business strategies; availability, terms and deployment of capital;
availability of qualified personnel and expense of recruiting and
retaining such personnel; changes in the asset management or
insurance industry, interest rates, credit spreads, currency
exchange rates or the general economy; underperformance of KKR's or
Global Atlantic’s investments and decreased ability to raise funds;
changes in Global Atlantic policyholders’ behavior; any disruption
in servicing Global Atlantic’s insurance policies; the use of
estimates and risk management in Global Atlantic’s business; and
the degree and nature of KKR’s and Global Atlantic’s competition.
All forward-looking statements speak only as of the date hereof.
KKR does not undertake any obligation to update any forward-looking
statements to reflect circumstances or events that occur after the
date on which such statements were made except as required by law.
In addition, KKR’s business strategy is focused on the long term
and financial results are subject to significant volatility.
Additional information about factors affecting KKR is available
in KKR & Co. Inc.’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2022, filed with the SEC on February 27,
2023, quarterly reports on Form 10-Q for subsequent quarters and
other filings with the SEC, which are available at www.sec.gov.
Past performance is not indicative or a guarantee of future
performance. This press release shall not constitute an offer to
sell or the solicitation of an offer to buy any securities in any
jurisdiction.
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version on businesswire.com: https://www.businesswire.com/news/home/20231129605147/en/
Investors: Craig Larson 1-877-610-4910 (U.S.) /
212-230-9410 investor-relations@kkr.com Media: Kristi Huller
212-750-8300 media@kkr.com
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