KKR(US:KKR)2023-02-26 16:00Investment Overview - As of December 31, 2022, KKR has completed over 690 private equity investments with a total transaction value exceeding $700 billion[22]. - KKR's asset management business has approximately 91% of its AUM consisting of capital that is not subject to redemption for at least 8 years or is classified as perpetual capital[29]. - KKR and its employees have approximately $28.1 billion invested in or committed to its own funds and portfolio companies, including $13.0 billion funded from its balance sheet[30]. - The firm operates with a global integrated platform that enhances its ability to raise capital and capture investment opportunities[24]. - KKR's investment teams leverage a substantial and diversified capital base, providing significant flexibility to grow investments[29]. Private Equity Business - The Private Equity business line manages $165.1 billion in AUM, which includes $115.3 billion in traditional private equity and $16.1 billion in growth equity[31]. - As of December 31, 2022, the Private Equity business line had $200 billion in Assets Under Management (AUM), showing significant growth from $91.6 billion in 2018[40]. - The traditional private equity portfolio consists of over 125 companies with approximately $290 billion in annual revenues, operating in around 20 industries across more than 20 countries[43]. - The company has committed $187.281 billion to various private equity funds, with $127.127 billion invested and $136.384 billion realized[42]. - The cumulative gross internal rate of return (IRR) for Private Equity and Real Assets investment funds since inception is 25.6%, significantly outperforming the S&P 500 Index (11.7%) and MSCI World Index (8.9%) over the same period[75]. Investment Strategies - The firm has expanded its investment strategies from traditional private equity to include leveraged credit, infrastructure, energy, and impact investments[22]. - The company has a disciplined investment approach, focusing on high-quality investments and rigorous due diligence to drive growth and value creation[44]. - The investment strategy includes a focus on strong business franchises and attractive growth prospects, avoiding hostile transactions[45]. - The company has access to exclusive investment opportunities through its global network and proactive business development strategies[46]. - The company’s growth equity strategy targets high-growth companies in the technology, media, telecommunications, and healthcare sectors, focusing on emerging opportunities[36]. Real Assets - As of December 31, 2022, the Real Assets business line managed $118.6 billion in AUM, including $64.4 billion in real estate, $50.5 billion in infrastructure, and $3.7 billion in energy[57]. - The Real Assets AUM grew significantly from December 31, 2018, to December 31, 2022, reflecting the firm's strategic investments[64]. - The total committed capital for Real Assets is $72.539 billion, with $27.441 billion in uncalled commitments[69]. - The total amount invested in Real Assets is $46.414 billion, with $18.204 billion realized and a remaining fair value of $38.589 billion[69]. - The firm emphasizes efficient capital management, top-line growth, R&D spending, geographical expansion, and long-term investment strategies[48]. Credit and Liquid Strategies - KKR's Credit and Liquid Strategies business line reported a total AUM of $34.358 billion as of December 31, 2022, with $11.663 billion in uncalled commitments[92]. - KKR's leveraged credit strategies primarily invest in leveraged loans, CLOs, high yield bonds, and stressed securities, focusing on capitalizing on credit market dislocations[82]. - The total realized amount across all credit and liquid strategies is $15.206 billion, with a remaining cost of $12.241 billion[92]. - KKR's private credit strategies focus on direct lending, junior mezzanine debt, and asset-based finance, targeting middle-market companies[84]. - The total amount committed across all funds was $34.358 billion, with $22.846 billion invested[98]. Global Atlantic - Global Atlantic, acquired by KKR, serves approximately three million policyholders as of December 31, 2022[23]. - Global Atlantic generated $9.8 billion in sales for the year ended December 31, 2022, with approximately 3 million policyholders served[128]. - As of December 31, 2022, Global Atlantic's total reserves amounted to $145.4 billion, with 47% in individual markets and 53% in institutional markets[140]. - Global Atlantic's investment management is overseen by KKR, focusing on stable, predictable, long-dated asset cash flows[147]. - Global Atlantic maintains a strong capital position, recognized by ratings agencies with an "A" rating from A.M. Best and "A-" from S&P Global Ratings, indicating a stable outlook[153]. Regulatory and Compliance - KKR's investment adviser subsidiaries are registered with the SEC under the Investment Advisers Act of 1940, ensuring compliance with fiduciary duties and anti-fraud provisions[179]. - Global Atlantic's U.S. insurance subsidiaries must adhere to state regulations, including financial statement preparation and risk management reporting[183]. - KKR operates under various regulatory frameworks across multiple jurisdictions, including the EU AIFMD for alternative investment fund managers[196]. - KKR Capital Markets LLC is registered as a broker-dealer with the SEC and is subject to periodic examinations and compliance requirements[181]. - KKR's operations in Japan include registration as a Type I and Type II Financial Instruments Business Operator, enabling a range of financial services[198]. Market Conditions and Risks - The company faces risks from difficult market conditions that could adversely affect net income, cash flow, and financial condition[208]. - Adverse financial market conditions may impact the frequency and size of fees generated by KKR's capital markets business[212]. - Global equity and credit market conditions significantly influence KKR's financial performance and ability to execute investments[213].