Aligning advisory to main activities
KKR & Co. L.P.’s (KKR) Capital Market and Principal Activities segment advises its portfolio companies and third-party clients on capital market solutions. The segment provides various services such as arranging equity and debt financing for transactions, placing and underwriting securities offerings, and other capital market services. KKR makes agency fees or underwriting fees for managing the transactions.
KKR’s principal activities include investments in its investment funds and coinvestments into its portfolio companies. KKR uses its Capital Market and Principal Activities segment to provide further capital for the funds or portfolio companies. The company aligns its interest with limited partners and other stakeholders.
KKR supports portfolio companies
KKR has a team of 45 professionals who offer services in its Capital Market and Principal Activities segment. Morgan Stanley (MS), Goldman Sachs (GS), and JPMorgan (JPM), which together make up 12.41% of the Financial Select Sector SPDR Fund (XLF), have strong divisions for financial advisory.
KKR’s Capital Market and Principal Activities segment earned total revenues of $237 million in 2014, forming 8% of the total segment revenues. The team focuses on the following:
- Acquisition finance is in line with the company’s private equity segment. Acquisition finance helps bridge the gap or expand private equity transactions.
- Buybacks during ownership, which enable KKR to optimize the cost of capital, increase the capital structure flexibility.
- Initial and secondary public offerings maximize investor exit returns. The segment is profitable, noncapital-intensive, and aligned with the company’s primary activities.