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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 

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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:

1 Presented by: Donald Homsher

2 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

3 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

4 Basis of KK&R KK&R Earnings Capital Markets Asset Management Private Equity

5 Basic Structure

6 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.

7 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

8 KK&R Accomplishments.

9 Basic Structure

10 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

11 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

12 Basic Structure

13 Explain J Curve 10%

14 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

15 Private Equity Allocation

16 Active Private Equity Funds

17 Basic Structure

18 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.

19 Basic Structure

20 KFN Portfolio Investment Portfolio Composition Corporate Loans--- 86% TotalCorporate Bonds--- 10% Total 99% Dept Instruments

21 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.

22 S&P Review of KFN

23 Basic Structure

24 Represents 30% KK&R

25

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27 KKR V.S. Euronext Amsterdam YTD Comparison KKR = 325% Gain Euronnext = 20% Gain 3 Year Comparison KKR = 60% Loss Euronnext = 27% Loss


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