The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
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Mogelof: 401(k)s will hit 10-15% private market allocations within a decade
“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.”
Mogelof: Over 80% of Private Wealth Flows Will Target Evergreens
“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.”
Biscardi: Mid-tier funds are struggling to raise capital in the Middle East
“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…”
Stavros: Employee equity programs need at least six months of upside
“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.”
Stavros: Frontline Equity Must Be Free, Never Shifting Risk to Workers
“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.”
Stavros: C.H.I. Employee Ownership Paid $175K Average, Up to $1M
“So the end payouts ended up being 175,000 on average, and we had hourly workers and truck drivers make almost a million dollars.”
Firms only avoid asset management partnerships to retain 100% of fees
“The only reason you wouldn't end up at partnership is if you wanted to retain a hundred percent of the economics.”
Mogelof: Private Markets Generate Hundreds of Basis Points Over Publics
“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.”
KKR Partners With Capital Group to Target Non-Accredited Investors
“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…”
Mogelof: Expanding Private Markets Prevent Return Dilution From Retail Inflows
“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…”
Mogelof: 30% to 50% of KKR Capital Raised Will Come From Wealth
“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.”
Charles: Only Ares, Apollo, Blackstone, and KKR reach Level 10 scale
“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.”
Asset Managers Will Soon Need Separate Pitch Books For Pro- And Anti-ESG
“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 …”
Stavros: Acquirers valuing employee culture will pay the winning price
“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 …”
Stavros: KKR Exits Investments Once 80% of Plan Is Achieved
“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'…”
Stavros: Stock Grants Alone Do Not Change Frontline Worker Behavior
“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.”
Stavros: KKR preempted C.H.I. auction by offering a 72-hour contract
“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.”
Rubenstein: Blackstone, Carlyle, KKR, Apollo make 95% of profits in developed markets
“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…”
Apollo, KKR, and Oaktree Lack Meaningful Differentiation in Distressed Debt
“Is Apollo and KKR and Oak Tree, what's the difference? And the answer is, there's not a lot of a difference.”
Kelly: Retail Access to Blackstone, KKR, and Apollo is a Great Evolution
“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.”
Mogelof: Industry will likely develop daily pricing for private markets in 401(k)s
“What's more likely is we over time as an industry work on daily pricing, all of the various different private markets.”
Sullivan: KKR's RJR Nabisco buyout proved to be a mediocre deal
“Some of those deals didn't wind up working out very well, and RJR proved to be a very mediocre deal for KER.”
Mogelof: KKR Avoids Direct-to-Consumer Distribution in Private Wealth
“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…”
Mogelof: Evergreen Wealth Products Hold Identical Investments to Drawdown Vehicles
“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.”
Mogelof: KKR Public Stock Is Not Pure-Play Private Markets Exposure
“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…”
Mogelof: KKR Fund Docs Give Wealth Vehicles Top-Tier Waterfall Allocation
“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.”
Mogelof: Drawdowns Yield Higher IRR, but Evergreens Yield Higher MOIC
“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…”
Mogelof: Private Wealth Alternatives Will Consolidate Around Large Brands
“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.”
Contagion Risk Interconnects the Top 8 to 10 Alternative Asset Managers
“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.”
Stavros: C.H.I. EBITDA Grew Organically from $60M to $130M
“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.”
Stavros: 600 C.H.I. employees received a 3.5% option pool
“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.…”
Stavros: Going public did not change KKR's investing culture
“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.”
Stavros: PE sponsors cannot dictate actions if holding management accountable for results
“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.”
Stavros: C.H.I. Grew Revenue 120% While Scrap Rose Only 7%
“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.”
Stavros: KKR raised preemptive C.H.I. bid four times to $680M
“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, …”
Stavros: Unmeasured engagement and avoided eye contact signal plant disengagement
“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…”
KKR has 25 active broad-based employee ownership programs across US portfolio
“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…”
Stavros: Direct investor involvement inside operations makes board meetings much more productive
“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…”
Stavros: KKR Bought C.H.I. at 13x and Exited at 14x EBITDA
“I think we paid 13 times on entry and on exit 14 times or something. There was not a huge uplift in multiple.”
Giannini: Top PE firms succeed with small, shared decision-making teams
“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 …”
Blackstone, Carlyle, and KKR reoriented their businesses around the wealth channel
“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…”
Rubenstein: Blackstone, KKR, and Apollo lacked global footprints when Carlyle expanded
“Blackstone, KKR, and Apollo really hadn't built international businesses, honestly, at that time, as we were beginning to do it.”
Wittenberg: KKR and Värde joined Kellogg's inaugural Expanding Equity cohort
“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”
Ted Seides: KKR Built a 250-Person Private Wealth Team
“So KKR went from no one in private wealth to a team of 250 reps.”
Mogelof: KKR Lacked a Marketing Department Five Years Ago
“When I first got here about five years ago, we actually didn't have a marketing department.”
Mogelof: Modern Fund Vehicles Expand Access Down to Non-Accredited Investors
“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…”
Mogelof: One-Third of KKR Distribution Staff Focuses on Wealth
“If you look across KKR, roughly a third of all of the folks that are in distribution are focused on our wealth business”
Mogelof: Financial Advisors Shift to Models to Expand Client Services
“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…”