KKR, CDPQ make first long-term co-investment

The acquisition of insurance company USI is part of a partnership between the two firms to target longer-duration and lower risk investments in businesses with stable recurring revenue.

KKR and Caisse de dépôt et placement du Québec have acquired USI Insurance Services, a US insurance brokerage and consulting firm, from Onex Corporation for $4.3 billion.

Terms of the transaction, which is set to close by the end of the second quarter, were not disclosed.

The transaction is the first to emerge from a partnership between KKR and CDPQ that will focus on long-term investments in stable businesses with the aim of holding assets longer than the three to five years typical in private equity, according to a source familiar with the matter.

Unlike some of its competitors, including Blackstone and the Carlyle Group, New York-based KKR has not focused on raising a long-term fund. Instead, it has invested in USI out of its balance sheet, the two firms said in a statement on Friday. KKR and Montreal-based CDPQ declined to comment.

“The partnership is designed to pursue attractive investment opportunities in high-quality businesses with a longer duration and a lower risk profile in order to support strong management teams and facilitate long-term strategic business building,” the firms said.

USI offers property and casualty insurance, employee benefits, personal risk and retirement services. The source noted that USI is an attractive investment because it provides stable revenue and that KKR and CDPQ could hold the company for at least 10 years.

“CDPQ and KKR are co-leading this investment and leveraging their respective expertise in the sector to support USI’s world-class management as it pursues its strategic plan for long-term growth,” Christian Puscasui, co-head of direct investment for private equity at CDPQ, said in the statement.