KKR & Co Inc at Bank of America Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Craig Siegenthaler - BofA Securities - Analyst : So KKR is one of the largest, oldest and most diverse alt managers in the world. The business model is also very differentiated. It marries third-party capital with its Capital Markets business, its insurance company, and Strategic Holdings. Rob, let's start with the macro setup. We're entering year three of the bull market. IPOs are expected to rebound. The yield curve has steepened. And there's record money market on the sidelines. What are your expectations for transaction activity in 2025? And what do you actually think are going to be the biggest themes that develop this year?

Question: Craig Siegenthaler - BofA Securities - Analyst : So Rob, I hit on this in the intro, but your model is very differentiated. You have Strategic Holdings, your insurance company, a large Capital Markets business, and you marry all that with a third-party AUM business. But that's just a high-level summary. How do you think your model is differentiated? What did I miss? And what are the key competitive advantages with this special model?

Question: Craig Siegenthaler - BofA Securities - Analyst : So Rob, so KKR had a very good 2024. I think you can just see that in the share price as one barometer, but the stock did pull back around 4Q results last week. Was there anything you thought the markets or investors were sort of missing or overreacting to that quarter?

Question: Craig Siegenthaler - BofA Securities - Analyst : I'm glad you said that because we also got a lot of inbound on that topic too. So I think it does clear it up. Let's talk about long-term growth. KKR is now in a flagship fundraising cycle. North America 14, Global Infra 5, there's an Asia bio fund in the future, so big funds are in the pipes. The retail channel looks to be accelerating and you're adding more product there. And Global Atlantic and the retirement channel also is scaling too. So the growth outlook looks pretty strong. What are you guys thinking about it now?

Question: Craig Siegenthaler - BofA Securities - Analyst : So I wanted to talk about KCM, Capital Markets business. In the fourth quarter, you hit $1 billion of fees. The ramp there has been really nice. There's a cyclical and maybe a longer-term secular component of that. But maybe talk about how that's been diversifying away. It used to be more, I believe, of a private market, domestic business, now it's more international, there's infrastructure, private credit real estate in there too.

Question: Craig Siegenthaler - BofA Securities - Analyst : So maybe just sticking with GA. There's many different sources to grow liabilities around the world there. Retail annuities in the US might be number 1, but there's PRTs, there's reinsurance. And Japan has been a market that's been more attractive sort of heating up too. So as you look around the world, how do you think about growing that liability base?

Question: Craig Siegenthaler - BofA Securities - Analyst : Let's talk about IV, which will help you grow GA faster with a little bit less capital. Maybe talk about what you're doing with that business.

Question: Craig Siegenthaler - BofA Securities - Analyst : So let's spend a minute on Strategic Holdings. This is one of your business that has almost an infinite TAM, which is kind of exciting on a long-term basis. How does your balance sheet and core private equity business fit in your model? What do you think will be the contributions to growth from this business? And also, you recently announced you're upping your stake in 3 different companies inside of that business. So maybe a little color on that, too.

Question: Craig Siegenthaler - BofA Securities - Analyst : Rob, I know you've been very focused on building out the private wealth channel. And I know we didn't get to this topic. You've added a lot of products recently. You've been using it to raise capital for some of your drawdowns. From a global standpoint, maybe what are you missing, what would you like to add?

Question: Craig Siegenthaler - BofA Securities - Analyst : Rob, I'd like to dig a little deeper on the retirement channel. What do we need to see from regulators in order for that to really take off? Because right now, there's a lot of focus on choosing the product with the lower fee, not necessarily the highest sort of net return. And there's also a daily liquidity requirement. And if that does open up, is Capital Group, your partner there, because they're already really big in that channel, or can we see KKR launch pure KKR products in that channel? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 11, 2025 / 8:30PM, KKR.N - KKR & Co Inc at Bank of America Financial Services Conference

Question: Craig Siegenthaler - BofA Securities - Analyst : So currently, KKR is the largest private market manager in Asia. I believe number 1 private equity business, number 1 infrastructure business. might be number 2 in real estate. What does that business look like beyond that today? And where would you like to take that?

Question: Craig Siegenthaler - BofA Securities - Analyst : Sticking with Asia for a second. It looks like Japan might be the most exciting market today just based on transaction announcements, maybe followed by India. But your business is pan-Asia. So you can take your funds and sort of pivot into areas where you see the highest total returns. Maybe talk about how that works.

Question: Craig Siegenthaler - BofA Securities - Analyst : So I had a private credit retirement question. How -- what does your origination capacity look like that sort of feeds Global Atlantic today? And if the banks have more capital via deregulation, could we see more competition in that ABF market?

Question: Craig Siegenthaler - BofA Securities - Analyst : So with that, we have time for one question from the audience. I mean just please raise your hand if you have a question. Unidentified Participant I wanted to touch upon, Craig, something you mentioned earlier on Strategic Holdings. So think back in 2018 or so, there's a lot of skepticism that Scott, Craig and Bill faced about the balance sheet in general. They outlined a good framework, I think, in the 2018 Investor Day, about how they can compound that balance sheet, by effectively seeding the various funds. Fast-forward to today, I think the team has proven the market wrong on compounding the balance sheet. It now feels like you guys have matured in terms of the number of products and funds that you have, and you're moving more towards direct investing in Strategic Holdings. Two questions. One, should we think about that compounding that you guys have been so successful at for a couple of decades any differently now, number one? And number two, and hopefully this is not so much of a stretch. Is this more aligned with more of the Berkshire Hathaway model going forward? Is that how you guys are thinking about it? Or am I thinking about it incorrectly?

Question: Craig Siegenthaler - BofA Securities - Analyst : Rob, with that, we are out of time, and we wrapped up day 1 of our conference. But Rob, thank you very much for joining us.