SEI’s Post

Private equity is sitting on a record $2.62 trillion in dry powder. This means huge potential for upcoming deals. With an improving M&A environment and top firms like KKR leading the charge, we're poised for a surge in activity. Still, the challenge remains in aligning valuations amidst economic uncertainties.

When the CEOs of one of the largest investment firms in the world talk, I tend to listen. Key takeaways from this piece with KKR co-CEOs Scott Nuttall and Joseph Bae: ▶ The 2023 slowdown resulted in a huge backlog of unsold investments that PE firms need to get off their books ▶ A combination of demand for return from investors and more reasonable market valuations and financing is fueling an increase in activity for PE firms ▶ The increased activity will likely result in PE firms like KKR taking portfolio companies that had been shelved in 2023 public and/or privately selling off assets (which bodes well for capital markets and private M&A players) ▶ Credit, insurance and infrastructure-based businesses could be hot areas of investment activity ▶ PE firms will continue to invest in the buzzing utility, telecom, energy and tech companies spaces ▶ There may be a growing market for the purchase of loan portfolios from US lenders to free up capital to fund the new wave of acquisitions ▶ The Asian market, in particular Japan, is ripe with investment opportunity https://lnkd.in/eN7NkT3q

You are not the only one eyeing Private Credit for that 10%+ return. It looks like the secret is out! 😜 KKR's recent survey among family offices shows that this year, CIOs are most focused on increasing exposure to Private Credit, Infrastructure, and Private Equity. To fund these investments, they intend to reduce their holdings in Public Equities and Cash. #privatecredit #familyoffice

There are 64x more private companies in the US than public. Yes, private markets will continue to be attractive given the sheer size of the opportunity set, but do public markets need a re-launch? Any views on how public markets could / should work? #alternatives #privatemarkets #publicmarkets #privateequity #pe #vc Source: KKR

A short, but sweet article that outlines KKR's belief to why #privateequity can produce compelling returns even with elevated interest rates. Click the 🔗⬇️.

With the rise of private equity, we should expect to see more buyouts, particularly of companies that have strong potential but are currently undervalued. The trend is clear – traditional funding methods are being sidelined as private capital takes center stage. This not only opens up new investment opportunities for individuals and institutional investors, but it also offers a lifeline to struggling businesses looking to revitalize their operations. We need to brace ourselves for seismic shifts in the financial landscape as we navigate this exciting chapter in the world of finance. Stay ahead of the curve by keeping an eye on these emerging trends! #privateequity #finance

Today we are sharing a very insightful 300-page report from KKR presented on 2024's Investor Day 👇👇👇 Beyond gaining insights into KKR, this deck offers valuable opportunities to enhance your industry knowledge and presentation skills. Key sections are: 🏦 Strategic Overview 🌎 Global Atlantic 🏛 Private Equity 🏬 Infrastructure 🏦 Real Estate 📜 Credit Get it now to start broadening your private equity knowledge. As usual, all you have to do is: ➡️ Follow our page Private Equity Bro ➡️ Like the post and comment your email 📩 ➡️ Tag another investor like yourself [optional] #PrivateEquity #Investments #Transactions

On the equity side of the traditional 60/40, we at KKR think that control-based Private Equity investing can likely play an important role in helping to generate higher returns in a world where our overall expected returns have fallen. Key to our thinking is that, despite a higher cost of capital, owning control positions with operational improvement opportunities can best the performance of a passive index by a good margin if our macroeconomic forecasts are correct. Importantly, the time to be bearish on Private Equity is not today; rather, it was actually in late 2021 and early 2022, when we believe several growth-oriented PE investors over-deployed their capital relative to trend amidst record low rates (and did not hedge in many instances). We see the investing environment as #glasshalffull. Read more https://go.kkr.com/3v5m8Bu

Back to the Future! Private equity funds have shown remarkable adaptability and resilience in the ever-evolving landscape of finance. Rising interest rates globally forced the sector to shift away from significant leveraged buyouts towards diversification of investment strategies. However, with anticipation of declining interest rates, a strategic window opens for private equity to return to executing significant leveraged buyouts, which the sector does best. Lower borrowing costs come at a time when the market is ripe with opportunities for transformative deals that can reshape industries. Private equity's agility in navigating through the changing tides of economic policies and interest rates is testament to the sector's robustness and strategic foresight. As we move forward, it's important to remember the significance of resilience and innovation in finance. #PrivateEquity #InvestmentStrategy #Finance #EconomicTrends #LeveragedBuyouts #Innovation #mergersandacquisitions

Great insights from Scott Nuttall, co-CEO at KKR on PE industry today - The current PE environment feels very normal - KKR is very optimistic (there have been much more challenging environments in the past) - We focus on things we can control and not what we can't control - PE world has changed - In the past it was just a small deal team doing investments, but today at KKR it is a 4-to-1 Ratio of non-deal team members to deal team members (4x - Value Creation teams play a key role) - Value Creation - key to success is to improve the business meaningfully - Focus on Value Creation / Operational Resources and work together collaboratively with management to improve businesses - We invest in good businesses and make them great with real Value Creation - Due to real Value Creation, KKR thinks of itself not as a PE financial buyer but actually as a strategic buyer - This strategy can deliver investment Alpha at scale - PE generates excess returns for LPs like millions of teachers, firefighters - it's who we work for and for whom we are fiduciaries - KKR is long opportunity and short capital - The #1 Job in PE is to generate investment returns - Years like 2023 was good for PE because that is when you want to deploy a lot of capital when assets are cheaper P.S. Great job by Adam Le on this interview and the PE Hub / Buyouts / PEI / Private Equity International team --------- #nexus2024 #pe #privateequity #business #growthequity #ceo #investing #finance