KKR

“Is Apollo and KKR and Oak Tree, what's the difference? And the answer is, there's not a lot of a difference.”

“It is our first cohort. It's being done this year, and this is five firms. These are, again, some of the largest firms. You know the names. Some of the names allow us, they allow us to use the names KKR, Varde and Beacon Investments real estate firm in Boston”

“The accountability part, I can't stress enough, and as we talked to Henry Kravis about this was his key driver, is he sees the accountability as how he's going to bring this into his organization.”

“Blackstone, KKR, and Apollo really hadn't built international businesses, honestly, at that time, as we were beginning to do it.”

“In the end, if you look at the large firms that we're now talking about, and I'll use the four big ones, Blackstone, Carlyle, KKR, and Apollo. They make 95% of their money in the developed markets. I'm counting China and India, I suppose, is developed for this…”

“There are Many well-known institutional alternative asset managers who have now really reoriented their entire businesses around the wealth channel and the high net worth channel. Blackstone, of course, being one, Carlyle being another, KKR, but it's not limit…”

“The entire crypto market cap was maybe ten billion, so less than one 100th of the size that it is today.”

“When you look at KKR, there's two people. When you look at Carlyle, there's three people. When you look at some of the great firms, That have done really well in our industry. It is not one person and it's not 15 people. So I think you have to have this group …”

“The rough economics of CHI overhead doors when we bought it were 20% or so EBITDA margins. I think they were 21% gross margins in the low thirties, solid mid single digit growth. It had been a steady, slow market share gainer.”

“We went from 60 of EBITDA in 1516 was great, 17 was great, 18 was great, 19 was great. We were, I don't know, 130 of EBITDA from 60. All organic, no acquisitions.”

“The people who value this culture are the ones who are going to pay the high price. So somebody who's maybe more of a slash and burn corporate buyer, I'm going to make this up. We didn't have one of those in the field, but they're not going to pay the winning …”

“For this to work, people need to see a path to at least six months of their income with upside, hopefully a year of income on average.”

“I think it was three and a half percent of the company in options. Of the 800 folks, maybe the top 200 got outright grants, made meaningful investments in the company, and were traditional management equity plan participants, as you would normally think of it.…”

“So I would say for an investor at the firm, being public really hasn't changed much other than giving the firm access to permanent capital that we can then go use to build out and seed new strategies.”

“The injury recordable incident rate, which is OSHA's key metric of safety, was 14 at the time, so what that means is for every hundred people in the plant, how many people per year were getting hurt? It was 14 out of a hundred per year.”

“Likewise, on the exit side, once we've achieved 80% of what we came to do, we start to head for the exits, as long as the markets are reasonable. We're not trying to say, well, now's the perfect time to sell, but as long as you look at the markets, you say it'…”

“And you can't ask people who make less than a 100,000 dollars to invest in the company. That needs to be an entirely free incremental benefit. This is not about shifting risk onto workers.”

“You can't tell people what to do because you can't hold them accountable. So what we try and say is here's the opportunity we see. All we care about is getting the opportunity, and we want to get it in the right way.”

“Even when we bought this was really a mid-cap deal for us, and we had always had a thought we would start a mid-cap strategy, so we were happy to do it, but this was a two hundred and fifty million dollar equity check, and our fund sizes are many, many billion…”

“Revenue was up a 120%. You took all this market share, lead time advantage versus the competition gapped out massively. Despite the 120% revenue growth, scrap only grew seven percent.”

“So we bid six hundred and twenty-five million and said we could sign in 72 hours. And they said, that's great. Glad you love it. We're not in that big of a hurry. We suggest you keep playing out the process. Six 50. Six 70. Six 80. I remember I sent an email, …”

“Engagement was not measured. That's always a dead giveaway when you ask what the engagement scores are like, and they're just not even measured. So there was no input coming from the workforce. And even walking through a manufacturing plant when people don't m…”

“It's not just you hand out stock and people all of a sudden change behaviors. It's a lot of work, a lot of communication, financial education.”

“If you look at their financials, I think their manufacturing plant employees made last year on top of their wages, like 35,000 dollars in profit sharing, a lot of money.”

“We started that about 12 years ago. Extended that across our entire industrials portfolio over a period of time, so we've done it maybe 12 times with manufacturing businesses, and then in total today have 25 live cases of this across all of our different verti…”

“I do think it's helpful if you have involvement from the people who have made the investment, who chair the board, who sit on the board, to also be in the business. By the way, it makes the board meetings way more productive when people are like, I know exactl…”

“I myself used to do four Kaizen events every year, a week of time working on a shop floor. We would go to Japan for 10 days at a time, and we would have the founders of the Toyota production system take us around to a dozen of the world-class lean plants in th…”

“I think we paid 13 times on entry and on exit 14 times or something. There was not a huge uplift in multiple.”

“I think we've gotten it right on the back end in terms of when we sold the business, prepaying for financial coaching with Goldman Sachs, prepaying for tax help to make sure people appropriately and timely file their taxes.”

“Over the years, we paid four dividends. Those dividends amounted to about 9000 dollars per employee.”

“So the end payouts ended up being 175,000 on average, and we had hourly workers and truck drivers make almost a million dollars.”

“At first round bids, we had a final round type offer. Our price was certain. We submitted a term sheet on a contract and we said, we'll sign this in 72 hours.”

“The ethos of our strategy in US private equity is around transformations. We're looking for good companies that we can inflect in a meaningful way and transform maybe operationally, maybe through acquisition or growth, maybe strategic repositioning, top gradin…”

“We're also seeing firms, and most recently KKR just announced this. Apollo also announced one. Hamilton Lane as well. They are tokenizing interests of their funds and putting them on the blockchain.”

“I said, I think someday, just like back in the eighties, you used to have to carry two business cards, one with a bug on it, union bug, and one without, and never get them mixed up. You're going to have two pitch books. You better not bring this pitch book to …”

“If something happens to Blackstone or Apollo or KKR, we're going to get the same question. What does your exposure look like? How do you guys think about this? So it's, yeah, there's an interrelatedness of eight or 10 of these companies for sure.”

“It was Bain Capital, KKR, Merrill Lynch, and the Frist family speaking for the equity, but then we also needed to figure out how do we fill out north of twenty billion dollars worth of debt that was going to need to be underwritten for this transaction.”

“When RJR was acquired by KKR, literally one of the largest LBOs at the time, they had one of the most complex capital structures that I had ever seen. It was filled with subordinated debt and paying kind bonds. It was a huge structure and a relatively small ma…”

“The funds at the top of the game are still, I think, doing really well there, but they've been there for 20 years. KKR, Blackstone, Carlisle. The next tier down, if you're a twenty billion dollar fund, a fifty billion dollar fund, and you don't have the same b…”

“There's only six firms at level 10, and they are enormous. They look more like Goldman Sachs than they look like Arctos. Aries, Apollo, Blackstone, KKRA, it's the biggest of the big.”

“The 19 seventies venture finally began to take form, and Henry Hillman and my father were anchor investors in Kleiner Perkins Fund One, and a few years later in KKR Fund One.”

“Blackstone has a team of hundreds of people. Blue Owl, hundreds of people, KKR, Apollo, hundreds of people to serve the Wealth Channel.”

“Today, our focus is on the intermediary part of the market, so we don't engage directly with investors. There are a lot of really great companies that have built out direct To investor models. We want to participate in that by simply having our investment solu…”

“I'd also tell you that the value add is much more significant, whether it's in credit or infrastructure, real estate, there's anywhere from a couple hundred to hundreds of basis points of excess returns that you can generate relative to public benchmarks.”

“All of our evergreen investment solutions have the same investments that you would find in our drawdown vehicles, and that's a really important differentiator.”

“Capital Group actually approached us, and they had Their own business strategy around deciding to want to partner with an alternative manager, and it was just such a perfect fit. They have this really strong business, especially in the independent broker-deale…”

“Anyone could buy our stock, which is certainly one way to get exposure to some of these investments. But if you think about it, the investment in KKR stock trades at a multiple to earnings and reflects the number of things that we do here at KKR, which include…”

“When I first got here about five years ago, we actually didn't have a marketing department.”

“The reality is private markets are growing by leaps and bounds. And if you think about it, even in the equity space, More and more companies are staying private for much, much longer. So it's early, early days before we worry or get concerned about our ability…”

“I think our co-CEO, Scott Nuttall, was on the record saying that over time, we would envision that 30 to 50% of our capital that we're raising is coming from the wealth channels.”

“Through whether it's an interval fund, a tender offer fund, a non-traded BDC, an operating company, there are now a number of new vehicles that asset managers can utilize, which really widen the aperture for investors to invest. And that includes not just qual…”

“If you look across KKR, roughly a third of all of the folks that are in distribution are focused on our wealth business”

“Financial advisors now have a much broader value proposition that they are holding out to their investors. Sure, they're building portfolios, but they're also providing financial advice and planning, tax perspectives, sometimes they're a financial concierge, s…”

“Most alternative firms, their first in the waterfall is always just their institutional vehicle. We have created in our documentation that first in the waterfall to have an allocation to our wealth vehicles as well.”

“All else equal, you would see the IRR of one of our private equity drawdown vehicles, for example, higher than the expected IRR that you'd find in an evergreen private equity solution. Having said that, because you're investing fully invested day one, your mul…”

“If you ask me, I think the drawdown vehicles serve a very important purpose for institutional investors. But over time, I would expect 80 plus percent of all wealth flows to go into these evergreen investment solutions.”

“My gut tells me that there actually won't be a lot of winners. There'll be a handful of winners in each of the asset classes, and they'll likely be the larger, well-branded alternative firms.”

“Some of those deals didn't wind up working out very well, and RJR proved to be a very mediocre deal for KER.”

“There's no doubt in my mind in a decade from now, we will see very meaningful allocations within that DC market to private markets. Whether it's 10%, 15%, it's going to be really, really big.”

“What's more likely is we over time as an industry work on daily pricing, all of the various different private markets.”

“But I think it's tremendous that individual investors now get access to the likes of Blackstone and KKR and Aries and Apollo. These are tremendous firms. It's a great evolution for all individual investors.”

“So KKR went from no one in private wealth to a team of 250 reps.”

“The only reason you wouldn't end up at partnership is if you wanted to retain a hundred percent of the economics.”