Major segment contributes to revenues
KKR & Co. L.P. (KKR) manages $61.5 billion under its Private Markets segment. The fund manages and sponsors a group of private equity funds, including sector-specific funds. It makes investments in real estate, which includes real estate, infrastructure, and energy.
Out of the total AUM (assets under management), FPAUM (fee-paying assets under management) currently stands at $47 billion. A higher FPAUM reflects the higher impact of the performance of the funds toward the total revenues.
Since its inception, KKR has generated 26% gross IRR (internal rate of return) and 19% net IRR for its investment funds.
As of December 31, 2014, KKR has made investments across 19 industries spread among 94 portfolio companies. KKR has invested approximately half of its deployed capital in the United States, a third in Europe, and the remaining portion in the Asian region.
KKR sources the transactions from the executives of major companies, investment advisory firms, and commercial and investment banks. KKR also focuses on pursuing business development strategies designed to generate deals based on the macroeconomic environment.
Alternative asset managers such as The Blackstone Group (BX), The Carlyle Group (CG), and Apollo Global Management (APO) as well as asset managers forming part of the Financial Select Sector SPDR Fund (XLF) are giving competition to KKR in terms of sourcing of transactions.
By planning exit strategies, KKR tries to optimize the returns for fund investors. It liquidates its investments through an initial public offering and secondary offerings, dividends, and sales to strategic buyers such as corporates or other funds.
Since it began, KKR has realized more than $87 billion in cash proceeds. KKR’s exit strategies are supported by its expertise through its Capital Market segment and relationships with corporate buyers and investment banks.