Wall Street Leans on Insurance Pools for $16 Billion Kuwait Deal
Three Wall Street giants used capital from the insurance industry to finance a large chunk of a $16 billion pipeline deal in Kuwait, a rare move for a Middle Eastern infrastructure transaction.
Blackstone Inc., Brookfield Asset Management Ltd. and KKR & Co. opted for insurance-backed financing for the debt portion of the landmark deal, according to people familiar with the matter, who declined to be named discussing private information.
Financial advisors including HSBC Holdings Plc and JPMorgan Chase & Co. had put together a multibillion-dollar package comprised of more conventional bank debt, though the buyers ultimately decided against using it, some of the people said.
The decision points to the growing role of insurers as providers of long-dated capital for infrastructure assets, whose predictable cash flows can be well suited to matching insurance companies’ long-term liabilities. While insurance capital is already commonly deployed in infrastructure financing in the US and Europe, its use as a substitute for large-scale bank financing remains relatively rare in the Middle East, making the deal a potential template for similar transactions in the region.
The sponsors themselves have deep links to the insurance industry. KKR wholly owns life and annuity company Global Atlantic, while Brookfield has built a large insurance operation through Brookfield Wealth Solutions, including American Equity Investment Life. Blackstone manages insurance assets through its Blackstone Credit & Insurance business and has strategic relationships with insurers including Nippon Life.
