by Allison McNeely and Lisa Abramowicz
KKR & Co. co-chief executive officers Joe Bae and Scott Nuttall are taking a cue from Berkshire Hathaway Inc.’s business model by betting big on long-term private equity ownership and the ensuing dividends.
The firm’s strategic holdings unit — which it created to hold 19 long-term private equity investments — is expected to kick off more than US$300 million of dividends by 2026 and double that number by 2028, Bae said in a Bloomberg Television interview Thursday at the firm’s New York headquarters.
“Berkshire Hathaway is an apt analogy,” Bae said, referring to Warren Buffett’s conglomerate. “There are a lot of powerful messages in what Berkshire has built. It’s the power of long-term ownership of assets, great businesses. The power of compounding, and the real power of smart capital allocation within your business.”
KKR is betting on gains in private equity as some of its peers move away from buyouts on the belief that the business is at scale and the biggest returns are in the past. KKR has doubled the size of its private equity business in the past five years.
“We’re students of long-term valuation creation,” Nuttall said.
KKR, founded in 1976 by Henry Kravis, Jerome Kohlberg and George Roberts, has grown beyond its private equity roots into an alternative-asset management giant with strategies including buyouts, credit, infrastructure, real estate and insurance.
At its investor day this week, KKR executives said they intended to grow the firm to US$1 trillion of assets under management in five years and reach at least US$15 per share in annual adjusted net income within a decade. It expects operating earnings from the strategic holdings unit to hit US$1 billion by 2030. The firm pointed to Asia, infrastructure, and retirement and wealth as key growth areas.
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