KKR’s Bae and Nuttall succeed Kravis and Roberts as co-CEOs

Trading information for KKR & Co is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, United States, on August 23, 2018. REUTERS / Brendan McDermid

Oct. 11 (Reuters) – KKR & Co Inc (KKR.N) announced on Monday it has elevated its co-chairs Scott Nuttall and Joseph Bae to co-CEOs, succeeding the billionaire private equity firm’s co-founders, Henry Kravis and George Roberts.

The transition has been in the works for years and is unlikely to come as a surprise to the company’s investors. KKR had appointed Bae, 49, and Nuttall, 48, as co-chairs in 2017. KKR said on Monday that Kravis, 77, and Roberts, 78, would remain involved in running the company as executive co-chairs.

KKR’s shares have tripled in value and its assets under management and distributable earnings have doubled since Bae and Nuttall officially became Kravis and Roberts’ main lieutenants four years ago, KKR said.

Still, Nuttall and Bae face a tall order in replicating the successful working relationship of the two cousins ​​who started KKR 45 years ago. Whether it’s having their names in the acronym KKR or fostering a close-knit culture of old-fashioned loyalty on Wall Street, Kravis and Roberts have maintained a tight grip on the company and have helped to shaping the leveraged buyout industry.

KKR shares rose 0.8% to $ 66.05 in pre-market trading in New York on Monday.

The move leaves Blackstone Group Inc (BX.N) CEO Stephen Schwarzman, 74, the only founder of a major publicly traded private equity firm not to have relinquished the role of chief executive, although his number 2, president and chief operating officer Jonathan Gray, has been standing in line for years to succeed him.

In 2018, Carlyle Group Inc (CG.O) CEO Kewsong Lee took over from co-founders David Rubenstein, William Conway and Daniel D’Aniello, and Ares Management Corp (ARES.N) CEO Michael Arougheti took over. to co-founder Tony Ressler. Apollo Global Management Inc (APO.N) co-founder Marc Rowan became CEO in March, replacing Leon Black who resigned following scrutiny of his ties to the late financier and convicted sex offender. Jeffrey Epstein.

Nuttall and Bae both joined KKR in 1996. Nuttall had previously spent less than two years at Blackstone, while Bae had an equally short stint with the lead investment group of Goldman Sachs Group Inc (GS.N).

Nuttall helped bring KKR to the stock exchange, a process that involved merging the company with an Amsterdam-listed fund in 2009 and then moving the listing to New York in 2010. He participated in the quarterly earnings call for the company with Wall Street analysts and also led KKR’s Capital Markets, Insurance, Credit, Hedge Funds and fundraising initiatives.

Bae has been the main driver of KKR’s expansion in Asia, making the company one of the largest US private equity investors on the continent. The Korean-US negotiator has also served on the investment committees of KKR’s global private equity business.

By attracting money from some of the world’s largest institutional investors such as pension plans and sovereign wealth funds, KKR has grown from a single $ 30 million fund in 1978 to over $ 429 billion in assets. currently under management. These assets include private equity, real estate, business credit and hedge funds.

KKR first gained wide recognition with its $ 25 billion leveraged buyout of RJR Nabisco in 1988, a battle that was immortalized in the bestselling “Barbarians at the Gate”. Its current investments include ride-sharing start-up Lyft Inc (LYFT.O), cosmetics maker Wella AG and media group Axel Springer SE (SPRGn.S).

Kravis and Roberts have an estimated net worth of $ 8.6 billion and $ 9.1 billion, respectively, according to Forbes.

In addition to his leadership changes, KKR said on Monday that it would take steps to eliminate its dual-class share structure. Carlyle was the first major publicly traded private equity firm to do so in 2019, followed by Apollo this year.

KKR said its ordinary shareholders will be able to vote on an individual basis on all material material issues, including the election of directors. He added that this will be achieved through a complex web of KKR entity mergers that are due to be completed by 2026.

Report by Chibuike Oguh in New York; edited by Diane Craft, Kirsten Donovan

Our Standards: Thomson Reuters Trust Principles.

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