Alternative Investment Spotlight: iCapital KKR Private Markets Fund

Posted on October 25, 2021

KKR, a global investment firm established in 1976, has a distinctive strategy that utilizes hundreds of professionals across KKR Capstone, Capital Markets, Global Macro and Asset Allocation, Public Affairs, Global Institute, Client and Partner Group and Senior Advisors for sourcing, diligence, and value creation.

KKR & Co. Inc. Overview

Established in 1976, KKR is a global investment firm with industry-leading experience and a strong culture committed to teamwork.

The iCapital KKR Private Markets Fund has the following investment objectives and features:

  • Long-term capital appreciation
  • Broad exposure to KKR private equity
  • Diversification across investment types, strategies, geographies, and vintages
  • Investment minimum of $25,000 (Accredited Investors only)
  • 1099 tax reporting and no capital calls
  • StepStone Group (The sub-adviser), provides recommendations and sourcing advantages on opportunities and portfolio construction

At BW, we favor how well KKR is aligned with its investors; they are committed to the needs and goals of their clients while investing alongside to assure alignment of interest. KKR has invested or committed $22 billion to their own funds and portfolio companies, making them one of the biggest investors in each of their funds.

More than 80% of value in underlying investments is either in Value Creation Mode (2-4 years old) or Harvest Mode (4+ years old). Nearly 40% of value in underlying investments fits within the Digital Age theme. More than 60% fits within all four key themes detailed below.

Digital Age

  • Technology has reshaped the global economy towards a more digitally oriented society
  • KKR believes that artificial intelligence will likely play a large part in building competitive advantage
  • KKR is focused on deals in enterprise software, scalable internet models and content-driven media with opportunity to add-value via global expansion, accretive M&A and operational intelligence

Health and Wellness

  • Due to the combination of an aging population, the growth of the global middle class, increases in chronic diseases and widespread innovation, KKR believes health care is a secular growth story
  • KKR expects a continued focus on addressing inequities in the healthcare system, preventative care, telemedicine and digital health and wellness services

Rise of the Global Millennial and Middle Class

  • In the United States, the 68 million millennials are now at an age where they are buying houses, spending on their families, and shifting their consumer preferences
  • Asia’s 800 million millennials are fast adopters of mobile internet technology, shaping the speed and trends of consumption growth and technology innovation

Corporate Carve-Outs

  • KKR is a leader in executing corporate carve-outs, completing 55+ carve-outs in its 44-year history and formulates an investment thesis and operational improvement plan
  • Increased public shareholder activism globally is expected to drive carve-out opportunities, and few PE firms have the operational resources that KKR has to execute complex deals

Broad Diversification

All in all, BW remains constructive and optimistic within the private equity space, especially with a strong, proven manager like KKR. Going back 20+ years, private equity has outperformed the public markets on an annualized basis. While this type of strategy may not be for every investor, we think this asset class provides a lot of opportunity and could be a good place for investors to further diversify their portfolios over the next decade.

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