KKR(US:KKR)2020-12-08 21:34Summary of KKR & Co. Inc. Conference Call Company Overview - Company: KKR & Co. Inc. (NYSE: KKR) - Event: Goldman Sachs U.S. Financial Services Conference - Date: December 8, 2020 - Participants: Scott Nuttall (Co-President and Co-COO), Alex Blostein (Goldman Sachs) Key Points Industry Performance - KKR has achieved an industry-leading investment performance with private equity returns exceeding 25% over the trailing 12 months despite market dislocations [2][6] - The financial services industry is growing at approximately 12% annually, while KKR's growth rate is around 17% [3][17] Financial Model - KKR's financial model includes third-party AUM, capital markets business, and a balance sheet, providing multiple revenue streams and resilience [4][15] - KKR executives own about 35% of the shares, aligning their interests with shareholders [4] Growth Opportunities - 18 out of 24 investing businesses have been established in the last 10 years, with potential for significant scaling [4] - The acquisition of Global Atlantic is expected to enhance KKR's presence in the insurance sector and add substantial AUM [5][19] Investment Performance - Private equity flagship funds increased by 27%, infrastructure by 19%, and opportunistic real estate strategies by 10% over the last 12 months [7] - KKR has strategically avoided sectors negatively impacted by COVID-19, such as hotels and retail, while being overweight in technology and digital commerce [9] Deployment and Fundraising - KKR is on track for record deployment and fundraising, with $45 billion deployed year-to-date, split between credit and private markets [12] - Fundraising has reached $32 billion year-to-date, with significant contributions from Asia [14] Resilience of Business Model - KKR's model has shown resilience during market disruptions, with management fee growth at 13% and distributable operating earnings growth at 9% [15][16] - The firm has maintained and even increased its margins during challenging times [16] Future Outlook - KKR anticipates significant growth in AUM, projected to exceed $300 billion post-Global Atlantic acquisition [17][19] - Management fees are expected to increase by 50% over the next three years, bolstered by the Global Atlantic acquisition [18] Insurance Sector Insights - Global Atlantic is expected to significantly contribute to KKR's earnings and AUM, with a focus on annuities and reinsurance opportunities [36][38] - The partnership with Global Atlantic is performing ahead of expectations, with additional transactions announced since the acquisition [37] Capital Management Strategy - KKR has a robust pipeline for monetization, with record amounts of accrued carry and embedded balance sheet gains [46][48] - The firm plans to continue share buybacks and manage capital returns effectively, reflecting a shareholder-oriented approach [50][53] Reporting Structure Changes - KKR is considering restructuring its reporting to better reflect the integration of Global Atlantic and its impact on the overall business model [41][44] Additional Insights - KKR's strategic focus on thematic investments and leveraging its extensive network has positioned it well for future growth [30] - The firm is optimistic about its fundraising outlook, driven by strong investment performance and deployment strategies [29] This summary encapsulates the key insights and strategic directions discussed during the conference call, highlighting KKR's robust performance and future growth potential in the financial services industry.