The Ledger
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Freise: KKR Lost Around $500 Million in Turkey
“In Turkey, I think we lost around five hundred million. What we didn't see was rule of law was a bit of a flexible concept there.”
Freise: $0-$100M ARR AI Scaling Speeds Will Not Become the Norm
“So I'm making the bold prediction that you have just seen three of the incredible winners in the space, but they will be not the norm for whatever comes afterwards.”
Freise: AI capital intensity prevents private fund sizes from halving
“I agree, and that is why we don't see fund sizes halving, because exactly of what you said, a lot of these opportunities are so capital intensive, because you suddenly have some interesting places to deploy.”
Freise: Bitcoin and the Euro will gain share in a multi-currency reserve system
“I think Bitcoin will take a larger share as will the Euro, but it's going to be more of a mix.”
Freise: KKR isn't worried about VC firms entering private equity
“I think the industry is big. Everybody has its place. I have done venture myself to know that it's an entirely different you know, skill set, so I'm not worried about it.”
Freise: Tariffs Are Not the Solution for Western Democracies
“I think tariffs are not the answer. We need to work on the underlying issues in our Western democracies. To try to raise money through tariffs is not the right approach.”
Freise: Founders must pick long-term backers over quick-profit VCs
“As a founder, the Investors you choose are so important. So of course it makes a huge difference. You know, if you're the founder of Helsing and you choose Daniel Eck, because Daniel Eck understands what long-term business building means, you know, and you don…”
Freise: Investors Must Impose Strict Annual Capital and Concentrated Risk Limits
“To have discipline, even in those times, yes, you want to deploy when there is incredible opportunity, but you need to set yourself Limits, right? There's just limits of how much you invest in a year, how many different types of in the theme things you back, b…”
Freise: KKR deployed 30-40% of its European fund during COVID
“Many people thought at KKR in Europe we were crazy when we leaned in and invested, I think a third, if not 40% of our current fund during COVID.”
Freise: KKR's $8B fund is Europe's largest standalone investment vehicle
“So Europe for KKR is an eight billion dollar fund. It's the largest standalone investment fund in Europe.”
Freise: KKR's investment in space firm OHB will be a big winner
“My space company in Bremen, which is OHP, we just did that investment. That's going to be a big winner given everything's going on.”
Freise: Aiming merely for 2x returns in private equity is failure
“It's a common misunderstanding that my industry is sleepy, boring, and just You know, aiming for those doubles over five years. If we do that, we don't do our job, really.”
Freise: 75% of KKR European PE deals are structured as partnerships
“In the last 1015 years, Three quarters of all the investments we have made are partnerships.”
Freise: Traditional SaaS Models Will Remain Good Investments Despite AI Hype
“When you see those winners, you better invest in double down and triple down, but it doesn't mean that software, you know, SaaS models investment, that is the bread and butter of many in our industry still. Will not be good investments anymore, and you just ha…”
Freise: KKR's DNA will never extend to early-stage venture
“I don't think that the DNA of KKR and of other later stage firms. It extends to what Insight does or what growth funds do. It will never extend to venture because it's a different skill set. It's a very different skill set.”
Freise: Only 1% of $192T individual wealth is in alternatives
“I think it's one percent of the 192 trillion are invested in alternatives. If that only goes To five percent you suddenly have 10 trillion dollars.”
Freise: KKR Europe's assets under management will double or triple in 10 years
“If you ask me will KKR Europe's asset under management, ah, double and triple over the next 10 years, the answer is yes.”
Freise: The Euro is currently the only credible alternative to the US dollar
“Right now, the only credible alternative is the Euro, and we in Europe, we need to get our act together.”
Freise: Other defense leaders will emerge alongside Helsing's founder within five years
“Torsten is, is the best, but in five years time, we look back and say, of course, Torsten couldn't have done it all by himself. There will be more, there will be others.”
Freise: Europe needs a European SEC and a single pan-European stock exchange
“Yes, of course we need a European SEC. Yes, of course we need A bit more of one pan-European place where people can go public. It's extremely important.”
Freise: The European Union has severely over-regulated AI and stifled innovation
“We absolutely over-regulated that space. We need to unleash the power of that technology, technological innovation, and not stifle it by too much innovation for sure.”
Freise: Indebted governments resort to financial repression to inflate away debt
“So if you don't, if you can't really raise taxation And if you can't really reduce expenditure, the only other way to do it, to get rid of your, you know, interest income, if your interest load is to inflate away your debt, right? So you do financial repressio…”
Freise: AI productivity gains will trigger a painful disruption phase
“It's too early to tell. I totally, I, well, I think it will. However, productivity gains, which will be extremely beneficiary to the world, don't mean that the challenges I just mentioned will be solved, because there will be this disruption phase where many, …”
Freise: KKR Passed on an Early Investment Opportunity in Alibaba
“We literally at KKR had the chance to invest in Alibaba a long time ago, and that came on my desk, and I said no.”
Freise: KKR aims to increase retail investor base to 50%
“We have six hundred seventy billion under management now. This number will go up massively, but what I want to see, I think historically the kind of individual retail type, broad based investor base is roughly 20%, maybe 30%. I want to see that to go to 50%.”
Freise: KKR European PE Avoids Emerging Market Risks
“And quite frankly, we have so much going on in Western Europe. We just don't take the risk. We stay close to what we can control.”
Freise: KKR previously failed in an Ethiopian tulip and rose investment
“We tried also Africa, Ethiopia, where we were the largest growers of tulips and roses that didn't work out for similar reasons.”
Freise: KKR turns non-founder portfolio CEOs into equity owners
“We making those entrepreneurs that are in there or these CEOs or these families, we make them Owners again, right? Because many of them weren't originally the founders of these companies.”
Freise: Markets Mistake Cyclical Liquidity Droughts for Permanent Structural Ruin
“I've seen at least three, if not four cycles where liquidity goes from unbelievable exuberance, like we've seen in You know, 20, 21 to the drought that we see now. Only for people to say at the peak, liquidity is, is limitless. And we, the party is, is never e…”
Freise: 2021-2022 fundraising velocity was artificial and unsustainable
“The party that was celebrated in 21, 22, in terms of the velocity of fundraising and investing was absolutely artificial, inflated, and not sustainable.”
Freise: Only 15% of KKR's exits over past 15 years were IPOs
“Over the last 15 years, only 15% of our exits were actually IPOs.”
Freise: KKR is the largest investor in its own funds
“We ourselves became owners of a five billion pool that had been valued at one and that became 10 and that's now 30. So we are actually the largest investor in our own things.”
Freise: PE firms like KKR and Apollo acquired insurance capital for liquidity
“So basically we Apollo and others have now taken under our wings insurance companies that provide all this liquidity.”
Freise: Vast majority of KKR Europe LP capital comes from US
“The large majority is, is America. You have some pockets in Europe, like Holland and Norway that are very strong. The Middle East is incredibly innovative and takes a large chunk.”
Freise: US directs 10% of defense spending to innovative startup ecosystem
“The US has done by saying 10% of the spend of the Department of Defense needs to go actually in the innovative ecosystem and space the same, right?”
Freise: Innovative European defense and hard-tech startups are emerging faster than expected
“Short answer to your question is, yes innovation, what, you know, what you know best Is the answer to these problems. But I wouldn't be so negative. They are coming now much faster than some people realize.”
Freise: US dollar's share of global reserves will decline slightly over ten years
“I do think in 10 years time, the percentage of reserves the US represents will probably have reduced slightly.”
Freise: KKR limits single-company fund concentration to 10-15%
“So we are absolutely rock solid you know, disciplined on this. You wouldn't, normally you don't do more than 10% of one fund. You know, I think in terms of underwriting, the absolute maximum is 15%, but it's in that range.”
Freise: Displaced European auto engineers immediately find jobs in defense and sensors
“When the automotive industry is shrinking because of some of the factors you mentioned, those people immediately find jobs in other industries which are growing. Whether that is censors, whether that is defense.”
Freise: Interest on national debt exceeds healthcare and defense spending in many countries
“If you think about 20, 25, 30% of all of our budgets going to two sources. One, to just serve, serve as the interest of the existing debt stock. It's huge. I mean, in many countries, these are higher expenditures Than our healthcare or defense budgets.”
Freise Allocates 30% of His 401(k) to Private Equity
“I do, and I allocate it every year. I'm just a long-term investor, so there's no point in checking it every quarter, but if I check it every five years, and I reallocate it to the same allocation, by the way, I allocate, I think, 30% to my industry, and the re…”
Freise: KKR targets around 15 portfolio investments per $8B European fund
“In a fund of eight billion, typically you have around 15 investments, ok?”
Freise: KKR European PE average check size is $400M to $600M
“On average it's like, 400 to six hundred million.”
Freise: KKR European PE holds 10% to 15% of capital for reserves
“Always do, but it's more like 10, 15% of the fund. So you would, of eight billion, you would retain, let's say, a billion or so as a reserve, because we do not need as much capital for follow-on rounds, because this is, you know, in terms of the maturity of th…”
Freise: KKR Is the Largest Owner of Fertility Clinics in Europe
“We are the largest owner of fertility clinics in Europe, ok?”
Freise: KKR's European deal scale grew from $1.5B for BMG to $10B for Axel Springer
“When I did the BMG deal, that was a one and a half billion deal for a 50% stake In that music company, you fast forward 10 years, and we had a ten billion deal to buy half of Axel Springer, which again was a fifty-fifty deal with the family.”