KKR & Co. Inc. · Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 10 Yr 11 Yr 12 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8Yr 9 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 9 Yr 10 Yr 11 Yr 12 $63bn
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KKR & Co. Inc.
Goldman Sachs U.S. Financial Services Conference – December 4, 2018
2
KKR Today
Note: See Appendix for a reconciliation to financial results prepared in accordance with GAAP. Figures as of September 30, 2018.(1) Private Equity defined as Private Markets less Core, Growth and Real Assets.
Balance Sheet ($13bn Cash & Investments)
Private Markets
• $69bn Private Equity(1)
• $23bn Real Assets
• $12bn Other Private Markets
$104bn AUM
• $63bn Credit
• $28bn Hedge Funds
Public Markets
$91bn AUM
Capital Markets Principal Activities
$19bn of Total Assets
• Equity and Debt Syndication
• Portfolio Companies and Third Parties
• $16.68 Book Value Per Adjusted Share
Global Franchise
• $195bn of third party AUM
• Unique capital markets platform
• Balance sheet used as a strategic asset to build and support strategies, facilitate capital markets transactions and compound value
3
AUM Growth Across Asset Classes
Note: Private Equity includes private markets less Core, Growth and Real Assets. AUM and Dry Powder percentages represent the increase over the last twelve months ended September 30, 2018.
$20 $32 $37 $32
$39 $47 $44
$57 $64 $65 $66
$74
$98 $104
$69
$4
$5
$11 $13
$14
$15 $16
$27
$36 $43
$54
$56
$71
$91
$23
$23
$37
$47 $45
$52
$62 $60
$83
$100
$107
$120
$130
$168
$195
$12
$29
$34
$28
$195
Private Markets Public Markets
Hedge Funds
Alternative Credit
Leveraged Credit
Private Equity
Other Private Markets
+18% CAGR
($ in billions)
Real Assets
AUM
Dry Powder
+27%
+21%
LTM Profile
4
(1) Commitments to investment strategies included in AUM total and respective bars.
$13
$18
$24
$114
$39
$0
$50
$100
$150
$200
$250
Balance Sheet -
Cash &
Investments
Permanent
(Third Party)
Core & Strategic
Investor
Partnerships
8+ Year
Duration at
Inception
Capital Subject
to Periodic
Redemption
Compounds with
Performance
IndefiniteDuration
Recycles / Compounds
• 80% of AUM is
performance fee
eligible with 8+
duration at inception
• Aim to grow all types
of capital
• Over time, we want a
higher portion of
Permanent and Core &
Strategic Partnership
Capital
($ in billions)
$195bn+ Balance Sheet
(1)
Quality of Capital
5
In Order to Double Earnings and Book Value by Year 5... (KKR Investor Day – July 2018)
Note: See Appendix for a reconciliation to financial results prepared in accordance with GAAP. The estimated future pre-tax distributable earnings and book value per share are for illustrative, informational purposes only and are not representative of any actual results. This information is not intended to forecast or predict future events, but rather to show the hypothetical estimates calculated using the specific assumptions presented herein. Actual results may differ materially from these assumptions and estimates. See Legal Disclosures.
$1.7
$3.2
$5.0
$-
$1
$2
$3
$4
$5
LTM 9/30/18 Year 5 Year 10
($ in billions)
$16.68
$32
$63
$-
$10
$20
$30
$40
$50
$60
$70
9/30/18 Year 5 Year 10
Book Value Per Adjusted SharePre-Tax Distributable Earnings
Our Goal is to Exceed This Level of Performance
• Conservative assumptions compared to our historical profile (see page 18 in Appendix)
6
Key Drivers of Value Creation
Our industry is growing
1
We are taking share
7
$3
$5
$7
$10
$14
$21
$15
$47
$76
$130
$195
$0
$60
$120
$180
$240
$300
$0
$5
$10
$15
$20
$25
2004 2007 2012 2016 9/30/2018 2020E 2025E
Alternatives AUM ($ in trillions) KKR AUM ($ in billions)
KKR is Taking Share
Source: PwC Asset & Wealth Management Revolution – Figure 4: Alternatives by type in USD trillion. October 2017.Note: CAGRs from 2004 to 2016. KKR’s definition of AUM is different from PwC’s definition of AUM, and therefore the comparison between the two may not be
directly comparable.
($ in t
rillio
ns)
Alternative AUM +12%
CAGR
KKR AUM +20% CAGR
($ in
billio
ns)
1
8
Key Drivers of Value Creation
Our industry is growing
1
We are taking share
Our model of third party AUM + Balance Sheet + Capital Markets is differentiated
2
Opportunity to compound value substantially and sustainably
9
Our Model2
LeveragedCredit
3rd Party Managed Capital
Balance Sheet
KKR Capital Markets
Strategic Partnerships /
JVs / Other Relationships
HedgeFunds
Other Idea Originators
/ JVs
Energy
Ways We Monetize
Ideas
Scale what we have that is or can be differentiatedPartner with others who are best in class, who we can help and who can help us
Real Estate
CoreInfraPE
& GrowthAlternative
Credit
10
25%
25%21%
15%
9%
3% 2%
PE - New
PE - Exisiting
Third Party
Infrastructure
Other / Balance Sheet
Energy / Real Estate
Credit
(1) Represents average annual revenue contribution by investment strategy for 2017 and year-to-date September 30, 2018.
KKR Capital Markets Connectivity Across the Firm2
Over $800 million of revenue since 2017 from a diversified stream
$18 $34
$105
$171
$129 $146
$218
$191 $182
$440
$539
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 LTM9/30/18
($ in millions)
Source(1):Capital Markets Revenue:
11
Key Drivers of Value Creation
Our industry is growing
1
We are taking share
Many of our businesses are young, inflecting and operating in large end
markets
3
Our growth opportunity is significant and global with scale benefits
Our model of third party AUM + Balance Sheet + Capital Markets is differentiated
2
Opportunity to compound value substantially and sustainably
12
Note: The terminal year in each graph represents September 30, 2018 or LTM as of September 30, 2018 as applicable. All other years represent calendar year-end.
KKR Capital Markets - Revenue
Credit - AUM
Infrastructure - AUM
Asia Private Equity - AUM
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11 Yr 12 Yr 13 Yr 14 Yr 15
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11 Yr 12
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11 Yr 12
$63bn
$539mm$13bn
$17bn
$1bn
$4bn
$2bn
$1mm
It Takes Time To Achieve Scale3
We Have Several Businesses in Their First 10 Years, With Significant Potential
13
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018+
Priv
ate
Markets
Pu
bli
c M
arkets
Impact
Infrastructure
42
19
11
9
US PE
Asia PE
Europe PE
Lending US
14
8
7
3
6
6
Leveraged Credit
Private Credit
Lending Europe
Special Sits
Hedge Funds
Energy
US Real Estate
5
5
3
0
4
2
1
0
Europe Real Estate
Asia Real Estate
Real Estate Credit
Tech Growth
Core
Healthcare Growth 2
Years(1)
(1) Years since strategy inception.
Multiple Young Strategies Ready to Scale3
14
$40
$160
MarshallWace
MarketLeader
Marshall Wace
Note: All figures represent AUM as of September 30, 2018.(1) Represents gross AUM, not KKR’s pro rata portion of AUM.
Significant Opportunity to Reach Top 3 Player Status3
$6
$120
KKR Platform MarketLeader
Real Estate
19x growth opportunity
$13
$129
KKR Platform MarketLeader
Infrastructure
10x growth opportunity
$63
$131
KKR Platform MarketLeader
Credit
2x growth opportunity
$10
$379
KKR Platform MarketLeader
Core
38x growth opportunity
($ in billions)
4x growth opportunity
(1)
15
Key Drivers of Value Creation
Our industry is growing
1
We are taking share
Many of our businesses are young, inflecting and operating in large end
markets
3
Our growth opportunity is significant and global with scale benefits
We are committed to equity value creation - employees own or control ~40% of KKR
shares
4
We believe C-Corp conversion will unlock value
Our model of third party AUM + Balance Sheet + Capital Markets is differentiated
2
Opportunity to compound value substantially and sustainably
42 Years of Superior Investment Performance
16
Mutual fund ownership has increased
Hedge fund / broker dealer ownership has decreased
The quality of our largest shareholders has improved significantly
Since Our July 1st Conversion to a C-Corp4
Index funds bought ~60 million shares
We remain in the early stages of investor education − there is much more for us to do
Appendix
18
Assumptions Per Investor Day
(1) $133 billion of FPAUM represents $119.7 billion of FPAUM as reported for the quarter ended March 31, 2018, plus $13.2 billion of FPAUM attributable to the FS Strategic BDC partnership which closed in April 2018.
(2) The assumptions are for illustrative, informational purposes only and are not representative of any actual results. This information is not intended to forecast or predict future events, but rather to show the hypothetical estimates calculated using the specific assumptions presented herein. Actual results may differ materially from these assumptions and estimates. See Legal Disclosures.
FPAUM
Management Fees
Capital Markets Fees
$133bn(1)
$948mm
$426mm
13% CAGR
>$1bn increase
16% CAGR
$40bn
$265mm
$1mm
• Last 10 Years (2007 to March 31, 2018):
• FPAUM – 8% CAGR
FPAUM Growth Assumption(2)
17.5%
13 – 15%
5%
Gross Investment Returns Assumptions (2)
• Private Equity
• Growth
• Leveraged Credit
• Real Estate Equity
• Infrastructure
• Energy
• Core
• Alternative Credit
• Looking Forward:
Conservative growth compared to our historical profile
$25bn of capital commitments in current AUM not yet earning
economics (will transition to FPAUM as invested)
Our Goal is to Exceed This Level of Performance
Conservative return assumptions compared to our historical profile
19
Note: Amounts in thousands.
Reconciliation of Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders (GAAP Basis) to Pre-tax Distributable Earnings
September 30,
2018
Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders 1,657,070$
Add: Net Income (Loss) Attributable to Noncontrolling Interests held by KKR Holdings L.P. 1,018,395
Add: Equity-based and Other Compensation - KKR Holdings L.P. 101,342
Add: Amortization of Intangibles and Other, net 123,059
Add: One-time Non-recurring Costs 11,501
Add: Realized Losses on Certain Investments 729,425
Deduct: Unrealized Carried Interest 404,665
Deduct: Net Unrealized Gains (Losses) 1,783,324
Add: Unrealized Performance Income Compensation 171,815
Deduct: Gain from Remeasurement of Tax Receivable Agreement Liability 67,221
Add: Income Tax Provision 96,022
Pre-tax Distributable Earnings 1,653,419$
Twelve Months Ended
20
Note: Amounts in thousands, except adjusted shares and book value per share amounts. Weighted Average Adjusted Shares is for the quarter ended September 30, 2018.
Reconciliation of KKR & Co. Inc. Stockholders’ Equity – Common Stockholders (GAAP Basis) to Book Value per Outstanding Adjusted Share
September 30,
2018
KKR & Co. Inc. Stockholders' Equity – Common Stockholders 8,524,213$
Impact of Consolidation of Investment Vehicles and Other Entities 253,662
Noncontrolling Interests held by KKR Holdings L.P. and Other 5,064,615
Other Reclassifications (17,446)
Equity Impact of KKR Management Holdings Corp. -
Book Value 13,825,044$
Outstanding Adjusted Shares 828,700,402
Book Value per Outstanding Adjusted Share 16.68$
As Of
21
Legal Disclosures
This presentation is prepared for KKR & Co. Inc. (NYSE: KKR) for the benefit of its public stockholders. This presentation is solely for informational purposes
in connection with evaluating the business, operations and financial results of KKR & Co. Inc. and its subsidiaries (collectively, “KKR”). Any discussion of
specific KKR entities is provided solely to demonstrate such entities’ role within the KKR organization and their contributions to the business, operations and
financial results of KKR & Co. Inc. This presentation is not and shall not be construed as an offer to purchase or sell, or the solicitation of an offer to
purchase or sell, any securities, any investment funds, vehicles or accounts, any investment advice, or any other service by any KKR entities, including
Kohlberg Kravis Roberts & Co. L.P., KKR Credit Advisors (US) LLC, KKR Credit Advisors (Ireland) or KKR Capital Markets LLC. Nothing in this presentation
constitutes the provision of any tax, accounting, financial, investment, regulatory, legal or other advice by KKR or its advisors.
This presentation may not be referenced, quoted or linked by website, in whole or in part, except as agreed to in writing by KKR & Co. Inc.
This presentation contains certain forward-looking statements pertaining to KKR, including certain investment funds, vehicles and accounts that are
managed by KKR (each, a “fund”). Forward-looking statements relate to expectations, estimates, beliefs, projections, future plans and strategies, anticipated
events or trends and similar expressions concerning matters that are not historical facts, including the statements with respect to the declaration and
payment of distributions or dividends in future quarters and the timing, manner and volume of repurchase of common units or common stock pursuant to its
repurchase program. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations, taking into account all information currently
available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or
are within its control. If a change occurs, KKR’s business, financial condition, liquidity and results of operations, including but not limited to dividends, tax
assets, tax liabilities, assets under management, fee paying assets under management, capital invested, syndicated capital, uncalled commitments, after-tax
distributable earnings, fee related earnings, segment EBITDA, core interest expense, cash and short-term investments, book value, and return on equity
may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from
the forward-looking statements: whether KKR realizes all or any of the anticipated benefits from converting to a corporation and the timing of realizing such
benefits; whether there are increased or unforeseen costs associated with the conversion, including any adverse change in tax law; the volatility of the
capital markets; failure to realize the benefits of or changes in KKR’s business strategies including the ability to realize the anticipated synergies from
acquisitions, strategic partnerships or other transactions; availability, terms and deployment of capital; availability of qualified personnel and expense of
recruiting and retaining such personnel; changes in the asset management industry, interest rates or the general economy; underperformance of KKR's
investments and decreased ability to raise funds; and the degree and nature of KKR’s competition. All forward-looking statements speak only as of the date
of this presentation. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the
date on which such statements were made except as required by law. In addition, KKR’s business strategy is focused on the long-term and financial results
are subject to significant volatility.
All forward-looking non-GAAP financial measures included in this presentation are provided only on a non-GAAP basis. This is due to the inherent difficulty of
forecasting the timing or amount of items that would be included in the most directly comparable forward-looking GAAP financial measures. As a result,
reconciliation of the forward-looking non-GAAP financial measures to GAAP financial measures is not available without unreasonable effort and we are unable
to assess the probable significance of the unavailable information.
Additional information about factors affecting KKR, including a description of risks that may be important to a decision to purchase or sell any common units
of KKR & Co. Inc., can be found in KKR & Co. Inc.’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and its other filings with the SEC, which
are available at www.sec.gov.
The statements contained in this presentation are made as of December 4, 2018, unless another time is specified in relation to them, and access to this
presentation at any given time shall not give rise to any implication that there has been no change in the facts set forth in this presentation since that date.
All financial information in this presentation is as of September 30, 2018 unless otherwise indicated. Certain information presented in this presentation have
been developed internally or obtained from sources believed to be reliable; however, KKR does not give any representation or warranty as to the accuracy,
adequacy, timeliness or completeness of such information, and assumes no responsibility for independent verification of such information.
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