Presentation on theme: "Presented by: Donald Homsher. Founders of KK&R Founded KK&R in 1976 with $120,000 Jerome Kohlberg and cousins Henry Kravis and George R. Roberts "— Presentation transcript:
Presented by: Donald Homsher
Founders of KK&R Founded KK&R in 1976 with $120,000 Jerome Kohlberg and cousins Henry Kravis and George R. Roberts 1987 Jerome Kohlberg resigned Jerome Kohlberg
KK&R The Corporation They are a leading global alternative asset manager Specialize in large complex buyouts 52 Billon AUM Offices in NYC, Menlo Park, SF, Houston, Washington DC, London, Paris, Hong Kong, Tokyo, Beijing, Mumbai, Dubai, Sydney
Basis of KK&R KK&R Earnings Capital Markets Asset Management Private Equity
History of KK&R Early Years Pioneers of LBOs 1980s Media Interest in LBOs Safeway 1986 RJR Nabisco New Millennium Improve operation to create value Debt investments Financial Holdings LLC 30% Public Arm KKR & Co. (Guernsey) L.P.
Explain LBO 80% Debt 20% Equity Predictable cash flows and potential growth The acquiring firm makes adjustments to acquired company. The Split-Up, Whole Firm
KCM- Capital Markets Primary Function Raising capital for KK&R funds and portfolio companies Secondary Function Providing capital markets advice Structuring new investment products Placing, arranging, or underwriting equity and debt transactions
KCM-Capital Markets Sample Deals SunGard - Underwriter for $500 million senior secured term loan and $500 million senior notes offering SunGard Oncor - Underwriter for $1.5 billion senior secured notes offering (Investment Grade issuer) Oncor Northgate Information Solutions - Placement agent for mezzanine financing Northgate Information Solutions Rockwood Holdings - Underwriter for $350 million follow-on equity offering Rockwood Holdings
Explain J Curve 10%
KK&R Private Equity Global leader of Private Equity Last three decades have sponsored 14 private equity funds with a told capital commitments of $59.3 billion Post investment they management over the long term to revitalize the business. KK&R employees/managers invested $1.9 billion
Private Equity Allocation
Active Private Equity Funds
KAM-Asset Management Is KKR investment approach focused on fundamental, long-term value investing Advantages. Quality of Deals. KAM access investment opportunities through KKR private equity professionals Capital Markets Intelligence. Through KKR Capital Markets KAM has market leadership in developing unique, flexible, long-term financing for its credit portfolios. Pricing Power. Ability to raise capital with the help of KKR Capital Markets.
Asset Management KFN KKR Financial is externally managed by KKR Financial Advisors. Real estate investment trust in July 2004, KKR Financial converted in May 2007 and now invests primarily in corporate loans and other securities. Base fee of 1.75% incentive fees of 25% of profits earned above a certain hurdle rate. Deferred 50% of the base management fee for KFN will opportunistically invest in equity securities to boost its returns. 2008 loan loss provisions $25 million end 2008 $428 million. Continue in 2009 with an additional $177 million in losses. For 2007, $2.16 per share, or approximately 80% of its net income. Effective in the fourth quarter of 2008, KFN eliminated its dividend. We do not expect a dividend to be paid in 2009.
S&P Review of KFN
Represents 30% KK&R
KKR V.S. Euronext Amsterdam YTD Comparison KKR = 325% Gain Euronnext = 20% Gain 3 Year Comparison KKR = 60% Loss Euronnext = 27% Loss