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KKR Doubled Its Private Equity Assets in Five Years. Can It Do That Again?

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The past five years for the private equity business at KKR have been celebratory. Private equity assets under management grew from $81 billion in 2018 to $176 billion at the end of 2023 — along with fee revenue and more that comes with it.

Much of that period was during a different phase of the interest rate cycle. Now, rates are higher, the deal market is still dull, and elections and geopolitical tensions are making the economic future unclear. But private equity leaders at KKR weren’t sweating over what to tell current and potential stakeholders at the firm’s investor day on Wednesday. KKR has managed private equity assets for half a century, performed well throughout different rate environments, and there is plenty of opportunity to grow the business, Nate Taylor and Peter Stavros, co-heads of global private equity at KKR, told Institutional Investor.

“We built this repeatable formula for selecting the right assets, constructing the right portfolios, and, as Pete [Stavros] often says, making our own luck and really bending the curve from an operational, value creation perspective. And I think it gives us a lot of confidence. Regardless of the market we’re in, we can continue to be as successful or more successful than we have been in the past,” Taylor said.

The private equity business also still has plenty of opportunity to scale, especially some parts of it, according to Stavros. KKR has seven private equity strategies — including core vintage buyout, health care strategic growth, global impact, and continuation — that didn’t exist in 2015 but have since been created and managed $60 billion in assets in 2023. The relatively new core private equity funds manage $35 billion in assets and they didn’t require an acquisition or the expensive hiring from a competing firm; the funds are managed by the existing KKR investment team.

Stavros expects some investors and potential ones will wonder if they missed out on KKR’s growth while its private equity and other businesses expanded in recent years (KKR’s stock has quadrupled over the past five years, from $23 to $100). In an interview, he imagined people asking him on Wednesday: “You just came off of a rippin’ five years, where can you possibly go?”

He hopes the presentation will answer that. The flagship private equity business and the new strategies continue to scale and most of the limited partners are institutional investors. Like other alternative managers, KKR is also continuing to develop products that make strategies more accessible to less wealthy private investors.

“There’s so much still to happen in our business. There’s no reason we shouldn’t have $300 billion of AUM in private equity globally,” Stavros said. “But it’s going to take people, I think, some time and effort to see it.”

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