KKR Co-CEO Discusses Private Credit Exposure
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Source: seekingalpha
- Asset Allocation Overview: KKR's approximately $750 billion in assets includes around $300 billion in credit, with $149 billion in private credit, highlighting the firm's significant positioning in the credit market, particularly in asset-based finance and direct lending.
- FS KKR Performance Analysis: FS KKR, the company's public BDC, faces challenges with a write-down in net asset value due to poor performance of certain investments, recording $558 million in net losses in Q1 2026, a stark increase from $67 million in the same quarter last year, reflecting market pressures.
- Profitability Enhancement: Despite a bearish market sentiment, KKR reported record management fee income growth of 23% over the past 12 months, with a 50% increase in visibility and monetization-related revenue in Q1, demonstrating the firm's robust profitability even in adversity.
- Investment Opportunity Outlook: Nuttall noted that infrastructure and asset-based finance have the potential for accelerated growth, particularly in Asia, which is expected to be KKR's fastest-growing market globally, indicating the company's optimistic outlook on future investment opportunities.
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Analyst Views on KKR
Wall Street analysts forecast KKR stock price to rise
9 Analyst Rating
9 Buy
0 Hold
0 Sell
Strong Buy
Current: 94.030
Low
145.00
Averages
159.67
High
176.00
Current: 94.030
Low
145.00
Averages
159.67
High
176.00
About KKR
KKR & Co. Inc. is a global investment firm that offers alternative asset management as well as capital markets and insurance solutions. The Company’s segments include Asset Management, Insurance and Strategic Holdings. Asset Management segment offers a range of investment management services to investment funds, vehicles and accounts and provides capital markets services to portfolio companies and third parties. Asset Management segment includes five business lines: Private Equity, Real Assets, Credit and Liquid Strategies, Capital Markets and Principal Activities. Insurance segment is operated by Global Atlantic, which is a United States retirement and life insurance company that provides a suite of protection, legacy and savings products and reinsurance solutions to clients across individual and institutional markets. Global Atlantic offers individuals fixed-rate annuities and others. Strategic Holdings segment represents its participation in its core private equity strategy.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Japan Investment Corp Considers Selling JSR Amid AI Boom
- Sale Consideration: Japan Investment Corp (JIC) is contemplating the sale of JSR two years after its $6 billion acquisition, aiming to capitalize on the rising valuations of chip supply chain firms in the current market environment.
- Acquisition Interest: Fujifilm and Mitsubishi Chemical have expressed interest in acquiring JSR, indicating potential opportunities for industry consolidation amid the surge in AI investments.
- Financial Performance: JSR reported a net profit of 60.7 billion yen ($380 million) on revenues of 400.7 billion yen for the fiscal year ending in March, demonstrating a recovery in profitability after a previous year's loss.
- Market Dynamics: With the AI boom driving up valuations of companies producing essential chipmaking materials and equipment, JIC aims to achieve its strategic goal of industry consolidation through the potential sale of JSR, reflecting Japan's enhanced competitiveness in this sector.
See More
Private Credit Defaults Expected to Rise to Record Levels
- Rising Default Rates: According to S&P, private credit defaults are expected to increase from 4.4% to 9-10%, primarily driven by the implications of the AI cycle, which may exacerbate risks associated with corporate loans and undermine investor confidence.
- Software Sector Pressure: The software industry accounts for 19% of private credit collateralized loan obligations, and as growth slows and margins compress, the repayment capacity of these loans is expected to be negatively impacted, adding to market uncertainty.
- Liquidity Crisis: With constrained liquidity, investors are beginning to attempt to withdraw funds, particularly with significant withdrawal requests anticipated in June, which could exert further pressure on the market and lead to more default events.
- Pension Fund Risks: While some large state pension funds continue to maintain investments in private credit, their significant risk exposure could have spillover effects on the broader financial markets, especially given that banks have loaned approximately $300 billion to private credit, potentially putting retail investors at risk.
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KKR and Energy Capital Partners Withdraw £5.5 Billion Bid for DCC
- Bid Withdrawal: KKR and Energy Capital Partners have withdrawn their £5.5 billion bid for Irish energy distributor DCC, indicating market caution regarding the transaction, which could impact investor confidence.
- Source Uncertainty: Sky News City Editor Mark Kleinman deleted his post regarding the bid, and the report is not visible on Sky News' website, raising questions about the reliability of the information and potentially diminishing market interest in future deals.
- No Comment from Sky News: Sky News did not respond to Reuters' request for comment, further fueling skepticism about the authenticity of the bid, which may affect decision-making among stakeholders and market expectations.
- Potential Market Impact: The withdrawal of the acquisition rumor could lead to volatility in DCC's stock price, prompting investors to closely monitor subsequent developments to assess potential market implications.
See More
KKR Co-CEO Discusses Private Credit Exposure
- Asset Allocation Overview: KKR's approximately $750 billion in assets includes around $300 billion in credit, with $149 billion in private credit, highlighting the firm's significant positioning in the credit market, particularly in asset-based finance and direct lending.
- FS KKR Performance Analysis: FS KKR, the company's public BDC, faces challenges with a write-down in net asset value due to poor performance of certain investments, recording $558 million in net losses in Q1 2026, a stark increase from $67 million in the same quarter last year, reflecting market pressures.
- Profitability Enhancement: Despite a bearish market sentiment, KKR reported record management fee income growth of 23% over the past 12 months, with a 50% increase in visibility and monetization-related revenue in Q1, demonstrating the firm's robust profitability even in adversity.
- Investment Opportunity Outlook: Nuttall noted that infrastructure and asset-based finance have the potential for accelerated growth, particularly in Asia, which is expected to be KKR's fastest-growing market globally, indicating the company's optimistic outlook on future investment opportunities.
See More
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- Significant Investment Scale: Since 2005, KKR has deployed over €10 billion in Italy, covering key projects like FiberCop, demonstrating its strategic focus on driving economic growth and transformation in the country.
- Leadership Team Relocation: Marco Fontana will relocate from London to Milan as Partner in the Infrastructure team, while Nicolò Della Casa will lead Private Equity activities in Italy, enhancing KKR's investment and client partnership capabilities in the local market.
- Market Opportunity Analysis: KKR executives noted that Italy's economic modernization and competitiveness enhancement create a positive environment for long-term capital, and the establishment of the Milan office will enable KKR to work more closely with local businesses and stakeholders, advancing its Private Equity strategy.
See More
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- Market Expansion: KKR announced the opening of a new office in Milan to enhance its market presence in Italy, particularly against the backdrop of significant investments in the telecom and energy sectors.
- Investment Background: Over the past two years, a KKR-led consortium acquired Telecom Italia's fixed-line network for €19 billion and took a 30% stake in Eni's biofuel unit for approximately €3.6 billion, underscoring its commitment to the Italian market.
- Business Coverage: The new office will encompass KKR's activities across private equity, real assets, credit, and insurance in Italy, aiming to integrate resources for improved operational efficiency.
- Leadership Team: The office will be led by Marco Fontana, a partner in KKR's infrastructure team, while Nicolo Della Casa will oversee private equity activities in Italy, ensuring effective execution of strategic initiatives.
See More
Japan Investment Corp Considers Selling JSR Amid AI Boom
- Sale Consideration: Japan Investment Corp (JIC) is contemplating the sale of JSR two years after its $6 billion acquisition, aiming to capitalize on the rising valuations of chip supply chain firms in the current market environment.
- Acquisition Interest: Fujifilm and Mitsubishi Chemical have expressed interest in acquiring JSR, indicating potential opportunities for industry consolidation amid the surge in AI investments.
- Financial Performance: JSR reported a net profit of 60.7 billion yen ($380 million) on revenues of 400.7 billion yen for the fiscal year ending in March, demonstrating a recovery in profitability after a previous year's loss.
- Market Dynamics: With the AI boom driving up valuations of companies producing essential chipmaking materials and equipment, JIC aims to achieve its strategic goal of industry consolidation through the potential sale of JSR, reflecting Japan's enhanced competitiveness in this sector.
See More
Private Credit Defaults Expected to Rise to Record Levels
- Rising Default Rates: According to S&P, private credit defaults are expected to increase from 4.4% to 9-10%, primarily driven by the implications of the AI cycle, which may exacerbate risks associated with corporate loans and undermine investor confidence.
- Software Sector Pressure: The software industry accounts for 19% of private credit collateralized loan obligations, and as growth slows and margins compress, the repayment capacity of these loans is expected to be negatively impacted, adding to market uncertainty.
- Liquidity Crisis: With constrained liquidity, investors are beginning to attempt to withdraw funds, particularly with significant withdrawal requests anticipated in June, which could exert further pressure on the market and lead to more default events.
- Pension Fund Risks: While some large state pension funds continue to maintain investments in private credit, their significant risk exposure could have spillover effects on the broader financial markets, especially given that banks have loaned approximately $300 billion to private credit, potentially putting retail investors at risk.
See More
KKR and Energy Capital Partners Withdraw £5.5 Billion Bid for DCC
- Bid Withdrawal: KKR and Energy Capital Partners have withdrawn their £5.5 billion bid for Irish energy distributor DCC, indicating market caution regarding the transaction, which could impact investor confidence.
- Source Uncertainty: Sky News City Editor Mark Kleinman deleted his post regarding the bid, and the report is not visible on Sky News' website, raising questions about the reliability of the information and potentially diminishing market interest in future deals.
- No Comment from Sky News: Sky News did not respond to Reuters' request for comment, further fueling skepticism about the authenticity of the bid, which may affect decision-making among stakeholders and market expectations.
- Potential Market Impact: The withdrawal of the acquisition rumor could lead to volatility in DCC's stock price, prompting investors to closely monitor subsequent developments to assess potential market implications.
See More
KKR Co-CEO Discusses Private Credit Exposure
- Asset Allocation Overview: KKR's approximately $750 billion in assets includes around $300 billion in credit, with $149 billion in private credit, highlighting the firm's significant positioning in the credit market, particularly in asset-based finance and direct lending.
- FS KKR Performance Analysis: FS KKR, the company's public BDC, faces challenges with a write-down in net asset value due to poor performance of certain investments, recording $558 million in net losses in Q1 2026, a stark increase from $67 million in the same quarter last year, reflecting market pressures.
- Profitability Enhancement: Despite a bearish market sentiment, KKR reported record management fee income growth of 23% over the past 12 months, with a 50% increase in visibility and monetization-related revenue in Q1, demonstrating the firm's robust profitability even in adversity.
- Investment Opportunity Outlook: Nuttall noted that infrastructure and asset-based finance have the potential for accelerated growth, particularly in Asia, which is expected to be KKR's fastest-growing market globally, indicating the company's optimistic outlook on future investment opportunities.
See More
KKR Opens New Office in Milan, Italy
- Localization Strategy: KKR has announced the opening of a new office in Milan, further solidifying its long-term commitment to Italy and enhancing its local presence in one of Europe's largest economies, which is expected to drive investment activities across Private Equity, Real Assets, Credit, and Insurance.
- Significant Investment Scale: Since 2005, KKR has deployed over €10 billion in Italy, covering key projects like FiberCop, demonstrating its strategic focus on driving economic growth and transformation in the country.
- Leadership Team Relocation: Marco Fontana will relocate from London to Milan as Partner in the Infrastructure team, while Nicolò Della Casa will lead Private Equity activities in Italy, enhancing KKR's investment and client partnership capabilities in the local market.
- Market Opportunity Analysis: KKR executives noted that Italy's economic modernization and competitiveness enhancement create a positive environment for long-term capital, and the establishment of the Milan office will enable KKR to work more closely with local businesses and stakeholders, advancing its Private Equity strategy.
See More
KKR Opens New Office in Milan to Expand Italian Presence
- Market Expansion: KKR announced the opening of a new office in Milan to enhance its market presence in Italy, particularly against the backdrop of significant investments in the telecom and energy sectors.
- Investment Background: Over the past two years, a KKR-led consortium acquired Telecom Italia's fixed-line network for €19 billion and took a 30% stake in Eni's biofuel unit for approximately €3.6 billion, underscoring its commitment to the Italian market.
- Business Coverage: The new office will encompass KKR's activities across private equity, real assets, credit, and insurance in Italy, aiming to integrate resources for improved operational efficiency.
- Leadership Team: The office will be led by Marco Fontana, a partner in KKR's infrastructure team, while Nicolo Della Casa will oversee private equity activities in Italy, ensuring effective execution of strategic initiatives.
See More
