Q4 2021 KKR & Co Inc Earnings Call

Speaker 1: Ladies and gentlemen, thank you for standing by. Welcome to KKR's fourth quarter 2021 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following management's prepared remarks, the conference will be open for questions.

Ladies and gentlemen, thank you for standing by welcome to Kkr's fourth quarter 2021 earnings Conference call. During today's presentation. All parties will be in a listen only mode. Following management's prepared remarks, the conference will be opened for questions.

Speaker 1: If you should require operator assistance during the call, please press star zero on your telephone keypad. As a reminder, today's call is being recorded. I'll now hand the call over to Craig Larson, Head of Investor Relations for KKR. Please go ahead.

If you should require operator assistance during the call. Please press star zero on your telephone keypad.

As reminder, today's call is being recorded I'll now hand, the call over to Craig Larson head of Investor Relations for KKR. Please go ahead.

Thank you operator and.

Speaker 2: Good morning everyone. Welcome to our fourth quarter 2021 earnings call. As usual, I'm joined this morning by Rob Lewin, our CFO , and Scott Nottle, our co-founder and CEO of

Good morning, everyone welcome to our fourth quarter 2021 earnings call as usual I'm joined this morning by Rob Lewin our CFO .

And Scott Nuttall, our co Chief Executive Officer.

We'd like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our press release, which is available on the Investor Center section at KKR Dot com.

Speaker 2: We'd like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our press release.

Speaker 2: available on the investor center section at kcr.com. And as a reminder, we report our segment numbers on an adjusted share basis.

And as a reminder, we report our segment numbers on an adjusted share basis.

Speaker 2: Our call will contain forward-looking statements which do not guarantee future events or performance.

Our call will contain forward looking statements, which do not guarantee future events or performance.

Speaker 2: Please refer to our earnings release and SEC filings for cautionary factors about

Please refer to our earnings release and SEC filings for cautionary factors about these statements.

Speaker 2: Now before we jump into our results for the quarter, we'd like to take a step back and talk about KKR in full. As we look at our business, we see four...

Now before we jump into our results for the quarter, we'd like to take a step back and talk about Kicky artful.

As we look at our business, we see four things first.

First we see scaling.

Speaker 2: Organically, over the last 12 months, AUM at TKR increased 48%

Organically over the last 12 months and you want Mike Hickey our increased 48%.

For an asset management business of our size that alone is a pretty remarkable statistic.

Speaker 2: For an asset management business of our size, that alone is a pretty remarkable thing.

Speaker 2: and including the Global Atlantic Acquisition, AUM increased 87% year over year.

And including the global Atlantic acquisition, a win increased 87% year over year.

Second.

Speaker 2: You're seeing the impact of the scaling across many of the numbers that we're reporting.

You're seeing the impact of the scaling across many of the numbers that we're reporting today.

Speaker 2: We see it in our financials. Management fees for the year increased 44 percent. Fee-related earnings increased 54 percent, while distributable earnings more than doubled. All of these figures are at a record level for us.

You see it in our financials management fees for the year increased 44%.

Related earnings increased 54%.

Distributable earnings more than doubled.

All of these figures are at a record level for us.

And you also see it in our operating statistics investment activity for example was that a new level.

Speaker 2: In 2020, we invested $30 billion across the first.

In 2020, we invested 30 billion across the firm.

Speaker 2: In 2021, that increased to over $70 billion.

In 2021 that increased to over $70 billion.

Speaker 2: A new capital raised of $121 billion for the year reflects breadth and diversification.

And new capital raised of 121 billion for the year reflects breadth and diversification.

Speaker 2: Approximately one third of that capital was raised from the broad private equity franchise, so including our growth strategies and core PE. Another one third came from our real assets businesses, with the remaining one third coming from …

Approximately one third of that capital was raised from the broad private equity franchise, so, including our growth strategies and core P.

Another one third came from our real assets businesses.

With the remaining one third coming from public markets.

The fund raising was truly diversified across the firm.

Speaker 2: And the other neat point about that howard in 21 billion is that 45% of it came from strategies that didn't exist at KKR five years.

And the other need point about that 121 billion.

Is that 45% of it came from strategies that didn't exist a KKR five years ago.

Speaker 2: We think that says a lot about our culture and our focus on innovation.

We think that says a lot about our culture and our focus on innovation.

Speaker 2: Third, looking forward, we remain very constructive on the opportunities we have ahead of us. With multiple identifiable growth avenues on a global basis.

Third looking forward, we remain very constructive on the opportunities. We have ahead of us with multiple identifiable growth avenues on a global basis.

Speaker 2: Rob's gonna touch on our fundraising pipeline and our areas of focus in

Rob is going to touch on our fundraising pipeline and our areas of focus in a few minutes.

Speaker 2: And finally, remember we feel advantaged during periods of dislocation.

And finally remember we feel advantaged during periods of dislocation.

Speaker 2: There are very few long dated pools of capital as large as ours that can take advantage of dislocation.

There were very few long dated pools of capital as large as ours that can take advantage of dislocations.

Speaker 2: and we have a unique business model and a unique culture that we think can lead to differentiated outcomes during these periods and that's all alongside of a 112 billion of drivers.

And we have a unique business model and a unique culture that we think can lead to differentiated outcomes. During these periods and that's all along side of 112 billion of dry powder.

Speaker 2: The fight's to say there's plenty to focus on and a lot of compelling opportunities in the uncertain world in which we all find ourselves. Now, turn it to our results.

Suffice to say Theres plenty to focus on and a lot of compelling opportunities in the uncertain world in which we all find ourselves.

Now turning to our results.

Fourth quarter was another very strong quarter for us.

Speaker 2: be related earnings per share of 69 cents, and after tax distributable earnings of $1.59 per share, a record quarterly figures for us.

Fee related earnings per share of <unk> 69 cents and after tax distributable earnings of $1 59 per share a record quarterly figures for us and.

Speaker 2: and full year FRE of $2.23 per share. And after tax DE of $4.44 per share, our record annual figure.

And full year FRE of $2 23 per share.

And after tax de of $4 44 per share a record annual figures for us.

Speaker 2: Looking at the quarter's operating metrics, new capital raised, total 19 billion, driven by several strategies across private equity, infrastructure, real estate, and credit.

Looking at the quarters operating metrics, new capital raised totaled $19 billion, driven by several strategies across private equity infrastructure real estate and credit.

Speaker 2: Notably, healthcare strategic growth too held its final close, bringing the fund to almost 4 billion or approximately three times larger than its price.

Notably health care strategic growth to held its final close.

Bringing the fund to almost 4 billion or approximately three times larger than its predecessor.

Speaker 2: This brings new capable rays for 2021 to $121 billion. And this record fundraising and the addition of 98 billion from the Global Atlantic Acquisition in February significantly increased our <expletive> .

This brings new capital raised for 2021 to 121 billion and this record fundraising and the addition of 98 billion from the Global Atlantic acquisition in February significantly increased our asset base.

Speaker 2: AYWM now totals 471 billion up 87% your

Our U N now totals 471 billion up 87% year over year.

The strength of this year's fundraising as importantly, quite diverse as I mentioned, a minute ago with about $70 billion from non flagship strategies.

Speaker 2: The strike to this year's fundraising is importantly quite diverse, as I mentioned a minute ago, with about 70 billion from non-flag ship strategies.

Speaker 2: Our younger strategies are scaling as they enter their second or third form lives and we continue to innovate and expand in with chasing seeds across strategies and across the yon.

Our younger strategies are scaling as they enter their second or third fun life, and we continue to innovate and expand into adjacencies across strategies and across geographies.

Speaker 2: and GA grew by 25 billion through block activity alongside of organic inflows in the air.

And <unk> grew by 25 billion through block activity alongside of organic inflows in the air.

We deployed 23 billion in the quarter cap.

Speaker 2: Capital invested in both traditional private equity and core private equity restruct.

Capital invested in both traditional private equity and core private equity were strong.

Speaker 2: Our real estate platform continues to see robust deployment with real estate credit, particularly operating a high run rate, and that's been amplified by Global Atlantic.

Our real estate platform continues to see robust deployment with real estate credit, particularly operating a high run rate and thats been amplified by global Atlantic.

Similarly on the public market side, Jay has added to the rate of private credit deployment in the quarter most meaningfully in asset based finance with.

Speaker 2: Similarly on the public market side, G.A. has added to the rate of private credit deployment in the quarter, most meaningfully and that's the basic...

Speaker 2: with additional deployment and direct lending and opportunistic strategy.

With additional deployment and direct lending and opportunistic strategies.

Speaker 2: Q4's activity brings capital invested for 2021 to 73 billion up to a half X-E-R-V-U.

Q4's activity brings capital investment for 2021% to 73 billion up two and a half X year over year.

Speaker 2: We've seen a step function type change in the level of deployment driven by the size and diversity of our capital base, while at the same time remaining judicious and chooses.

We've seen a step function type change in the level of deployment driven by the size and diversity of our capital base, while at the same time remaining judicious and choosing our spots.

Now just as we continue to see strength on the fund raising and deployment front.

Speaker 2: Now just as we continue to see strength on the fundraising and deployment front.

Speaker 2: Our funds and strategies continue to perform at a very high level. You can see this on page 7 of the yearnings release, where we detail investment performance for the quarter and the year across investment stress.

Our funds and strategies continue to perform at a very high level you can see this on page seven of the earnings release, where we detail investment performance for the quarter and the year across investment strategies.

Speaker 2: And finally, I want to touch on Capitol Return before Rob walks through Arning's profile.

And finally I wanted to touch on capital return before Rob walked through our earnings profile.

Speaker 2: As you can see at the bottom of page two of the release, consistent with historical practice, we're pleased to announce an increase in our annual dividend from 58 cents to 62 cents per share.

As you can see at the bottom of page two of the release consistent with historical practice, we're pleased to announce an increase in our annual dividend from <unk> 58 to 62 per share.

Speaker 2: This is the third consecutive year we've increased our dividends since we changed our corporate structure.

This is the third consecutive year, we've increased our dividend since we changed our corporate structure.

Speaker 2: and the change will go into effect beginning with any dividends to be announced for the first quarter of 2020.

And the change will go into effect, beginning with any dividends to be announced for the first quarter of 2022.

Speaker 2: And since our third quarter earnings call in November through last week, we repurchased $363 million of our stock in the open market, with the majority of that coming in 2022 in the midst of all of this volatility. And with that, I'll turn the call over to Rob. Thanks.

And since our third quarter earnings call in November through last week, we've repurchased $363 million of our stock in the open market.

With the majority of that coming into 2022 in the midst of all of this volatility.

And with that I'll turn the call over to Rob.

A lot Craig.

I will walk you through our quarterly P&L.

Our management fees increased by 49% this quarter versus Q4 of 2020.

Speaker 3: Our management fees increase by 49% this quarter versus Q4 of 2020.

Speaker 3: Management fee growth was driven by clothes across a number of active funds.

Management fee growth was driven by closes across a number of active funds in the quarter.

Speaker 3: These closes alongside our investment activity, bring fee paying AUN to 357 billion.

These closures alongside our investment activity break fee paying AUM to 357 billion.

Speaker 3: The fundraising success, experienced over the past few quarters, is really starting to flow through this line. But another 38 billion of committee capital, not yet paying fees.

The fund raising success experienced over the past few quarters.

Really starting to flow through this line with another 38 billion of committed capital not yet paying fees.

Our net transaction and monitoring fees were primarily driven by our capital markets franchise, this quarter, which are $320 million. This.

Speaker 3: Our net transaction of modern fees were primarily driven by our capital markets franchise this quarter, which earned $320 million.

This is a high point for us.

Speaker 3: This revenue figure also encompasses a record number of transactions in a single quarter. And we only had one fee event that was...

This revenue figure also encompasses a record number of transactions in a single quarter.

And we only had one fear that that was greater than $20 million.

Speaker 3: For the year, capital markets totaled $847 million with revenues diversified by type. Approximately a quarter of our revenues related to each of private equity, infrastructure, as well as third party clients. With the remaining quarter diversified across multiple different asset class.

For the year capital markets totaled $847 million with revenues diversified by type approximately a quarter of our revenues related to each of private equity infrastructure as well as third party clients with the remaining quarter diversified across multiple different asset classes.

Moving to our expenses fee related compensation came in right at that 22, 5% Mark at the midpoint of the range we have discussed previously.

Speaker 3: Moving to our expenses, fee-related compensation came right at that 22.5% mark, the midpoint of the range we've discussed previously. While our other operating expenses...

While our other operating expenses came in at $140 million.

Speaker 3: The increase here was driven by higher placement fees as well as professional fees, given high activity levels across the firm.

The increase here was driven by higher placement fees as well as professional fees given high activity levels across the firm.

Speaker 3: We are also all back in the office across most of our location.

We are also all back in the office across most of our locations leading to an uptick in operating costs versus this time last year.

Speaker 3: leading to an outtake and operating cost versus this time less.

Speaker 3: In total, this brings our fee related earnings to $606 million for the quarter, which is up 45% versus Q4 of 2020.

In total this brings our fee related earnings to $606 million for the quarter, which is up 45% versus Q4 of 2020.

Speaker 3: The quarterly and yearly FRD margin both came in at 63%.

The quarterly and yearly FRB margin both came in at 63%.

Speaker 3: And on a per share basis, FRR is $2.23 for the year.

And on a per share basis, FRE is $2 23 for the year.

Now moving onto realizations.

Speaker 3: Realized carried interest total 568 million in the quarter.

Realized carried interest totaled $568 million in the quarter.

Speaker 3: Our realized incentives totaled 351 million in the quarter, largely due to martial weights a strong investment performance.

I realized incentive fees totaled 351 million in the quarter largely due to Marshall Wace has strong investment performance.

And realized investment income totaled $336 million.

Speaker 3: and realize investment income titled 336 miles.

Speaker 3: Together, these earning streams resulted in 1.4 billion of asset management operating.

Together these earning streams resulted in $1 4 billion of asset management operating earnings.

Our insurance segment also experienced an incredibly strong quarter with $347 million of operating earnings.

Speaker 3: Our insurance segment also experienced an incredibly strong quarter with 347 million of operating earnings.

Speaker 3: We queue for, Global Antics sold its interest in orages of energy, a solar renewable energy developer, at 12 times cost, resulting in a $200 plus million benefit to segment operating earners.

In Q4 global antics sold its interest in origin energy.

Solar renewable energy developer at 12 times cost, resulting in a 200 plus million dollar benefit to segment operating earnings.

Speaker 3: This was really an amazing result for global Atlantic and all of its shareholder.

This was really an amazing result for global Atlantic and all of its shareholders.

Speaker 3: while still recognizing that 12-time gains are not representative of our growth forward expectation.

While still recognizing the 12th time gains are not representative of our go forward expectations here.

Excluding all variable investment income for the year a G I.

Speaker 3: excluding all variable investment income for the year at G.A., ROE would have still been a bit about 14%.

You would have still been a bit about 14%.

Speaker 3: This return represents a strong core operating level and modestly above are 12 to 13% expected range.

This return represents a strong core operating level and modestly above our 12% 13% expected range.

Most importantly.

Speaker 3: A year into our partnership with GA, we couldn't feel any better about our collective progress.

A year into our partnership with GE, we couldnt feel any better about our collective progress.

Speaker 3: including the performance and management, the profitability of our stake, scaling of the AUM and the integration of our team.

The performance of management, the profitability of our stake scaling of the U N and the integration of our teams.

Speaker 3: In total, our aftertax distributable earnings were 1.4 billion for the quarter, or $1.59 per share.

In total our after tax distributable earnings were $1 4 billion for the quarter were $1 59 per share.

Speaker 3: We're preparing 2021 to 2020. Deave for share is up over two times.

Comparing 2021 to 2020 <unk> per share is up over two times.

Speaker 3: Alongside an increase in earnings, we are also seeing continued compounding in our book value per share, which now totals $28.77.

Alongside an increase in earnings. We are also seeing continued compounding in our book value per share, which now totals $28 77.

Speaker 3: As a component of this, our 61% economic interest in global land-expo value now totals 3.4 billion, a 15% since the first quarter of our ownership.

As a component of this.

Our 61% economic interest in global Atlantic book value now totals $3 4 billion.

15% since the first quarter of our ownership.

Speaker 3: In summary, our business continues to perform at an exceptionally high level, and this is clearly evident in both our Q4 as well as our 2021 results. Now there are two additional topics I would like to go through.

In summary.

Our business continues to perform at an exceptionally high level and this is clearly evident in both our Q4 as well as our 2021 results.

Now there are two additional topics I would like to go through in a bit more detail.

The first is our potential.

Speaker 3: In 2021, we generated almost $5 billion of distributable operating things.

In 2021, we generated almost $5 billion of distributable operating income.

Speaker 3: really a step function increase from the 2.3 billion that we generated in 2020.

A step function increase from the $2 3 billion that we generated in 2020.

Speaker 3: And to be clear, we don't believe these results yet reflect even our run rate profitability, let alone our potential. There are numbers.

And to be clear, we don't believe these results yet reflect even our run rate profitability, let alone our potential.

There are a number of reasons why we have room to run.

Speaker 3: Let's start with management fees. At 1231, we have 38 billion of committed capital that isn't yet running through our management fee line. A year ago, that

Let's start with management fees at 12, 31, we had 38 billion of committed capital that isn't yet running through our management fee line.

A year ago that number was $20 billion.

Speaker 3: And that's that 38 billion, which has a weighted average management fee north of 100 base.

And as that 38 billion, which is a weighted average management fee north of a 100 basis points.

Speaker 3: either invested or enters its investment period, it will drive management fees in a meaningful way.

They are invested or enters its investment period, it will drive management fees in a meaningful way.

And I'll come to our future fundraising potential from here in just a minute.

Speaker 3: and we'll come to our future fundraising potential from here in just a minute.

Next our embedded gains.

Speaker 3: Gross unrealized carry at year end totals 8.6 billion compared to 4.7 billion a year ago.

Unrealized carry at year end totaled $8 6 billion compared to $4 7 billion a year ago.

Speaker 3: So even after a record realization year, gross unrealized carry increased over 80%. Positioning us really well for future realized performance.

So even after a record realization year gross unrealized carry increased over 80%.

<unk> got really well for future realized performance income.

Speaker 3: and embedded balance sheet gains of 1231 were 6.7 billion up from 4.4 billion a year ago.

And embedded balance sheet gains of 12 31 were $6 7 billion.

Up from $4 4 billion a year ago.

Speaker 3: So similarly, while we saw a meaningful step up and balance sheet realizations in 2021, our embedded gains increased over 50%.

So similarly, while we saw a meaningful step up in balance sheet realizations in 2021.

Embedded gains increased over 50%.

And finally as the overall footprint of the firm continues to grow leading to increased deployment of more relationships. This in turn continues to expand the opportunities we expect to have in our capital markets business.

Speaker 3: And finally, as the overall footprint of the firm continues to grow, leading to increased deployment and more relationships, this in turn continues to expand the opportunities we expect to have in our capital markets business. So really strong performance in 2021.

So really strong performance in 2021.

Or was it really meaningful potential still yet in front of us.

Speaker 3: That leads into the second topic I'd like to touch on. Fun raising and our pipe.

That leads into the second topic I'd like to touch on fundraising and our pipeline.

Speaker 3: As we look forward, we expect to be fundraising across 30 plus strategies in 2022. So we have a lot of runway and opportunity in front of us. In terms of areas of focus.

As we look forward, we expect to be fundraising across 30 plus strategies in 2022.

So we have a lot of runway and opportunity in front of us.

In terms of areas of focus I'd highlight four.

The first area is private wealth.

Speaker 3: We now manage a little over 50 billion of private wealth assets. And we've been investing menically into this channel.

We now manage a little over 50 billion in private wealth assets and we've been investing meaningfully into this channel.

Speaker 3: Historically, private wealth has contributed about 10 to 20% of the money that we raised annual.

Historically private wealth has contributed about 10% to 20% of the money that we raise annually.

Speaker 3: with the investments we're making in people, technology and new product innovation.

With the investments, we're making in people technology and new product innovation.

Speaker 3: alongside the strength of our brand and our track record. We believe over time that it should be 30 to 50% of the money that we raise.

Alongside the strength of our brand and our track record.

We believe over time that it should be 30% to 50% of the money that we raise.

The second area would be Asia.

Speaker 3: More than half of global GDP growth is expected to come from Asia. And as a reminder, eight of our 21 offices are in the reach.

More than half of global GDP growth is expected to come from Asia and as a reminder, eight of our 21 offices are in the region.

Speaker 3: We were early to Asia, and we've seen significant scaling as AUM across our Asia dedicated strategies has gone from 20 billion to 42 billion over the last two years, with private equity being the biggest driver of that growth.

We're early days and we've seen significant scaling as AUM across our Asia dedicated strategies has gone from $20 billion to 42 billion over the last two years with private equity being the biggest driver of that growth.

Speaker 3: We expect to be fundraising for five Asian focus strategies outside of

In 2022, we expect to be fundraising for five Asia focused strategies outside of P across our infrastructure real estate credit and growth businesses.

Speaker 3: across our infrastructure, real estate, credit and growth.

Speaker 3: We have a leading footprint in Asia today, and building on our presence is a priority, and a big opportunity for us.

We are a leading footprint in Asia today.

And building on our presence is a priority and a big opportunity for us.

The third area would be our broader core franchises.

Speaker 3: These are all adjacent strategies to what we're doing in private equity real estate as well as infrastructure.

Theyre all adjacent strategies to what we're doing in private equity real estate as well as infrastructure.

Speaker 3: So think longer term capital, a lot of which can be raised on a continuous base.

So I think longer term capital a lot of which can be raised on a continuous basis.

Speaker 3: for strategies that are leveraging resources and deal flow that are already resonant within the firm today.

For strategies that are leveraging resources and deal flow that are already resident within the firm today.

Speaker 3: A year ago, we were at 17 billion of AUM across CORE, and today that figure is north of 40.

A year ago, we were at 17 billion of AUM across court and today that figure is north of $40 billion.

Speaker 3: In 2022, we look to continue the momentum and expect to be fundraising across five distinct strategies in private equity, real estate and infrastructure.

In 2022.

We look to continue the momentum and expect to be fundraising across five distinct strategies in private equity real estate and infrastructure.

Yeah.

Speaker 3: And the fourth area is what we're doing across our real estate franchise.

And the fourth area is what we're doing across our real estate franchise.

Speaker 3: A year ago AUM, across real estate, was 15 billion. Today that figure is 41 billion.

A year ago, a U M across real estate was $15 billion today that figure is 41 billion.

Speaker 3: In 2022, we expect the fundraise across 10 distinct real estate strategies, including the next generation of our opportunistic real estate strategies across all three geographies. And with that,

In 2022, we expect to fund raised across 10 distinct real estate strategies, including the next generation of our opportunistic real estate strategies across all three geographies.

And with that let me turn it over to Scott.

Speaker 4: Thank you Rob, and thank you everyone for joining our call today.

Thank you Rob.

Thank you everyone for joining our call today.

It's Greg and Rob reviewed two.

Speaker 4: 2021 with a very strong year with record AUM, FRE, and earnings.

2021, with a very strong year with.

With record AUM FRE and earnings.

Speaker 4: The hard work of the last 10 to 15 years of business building began to show up in bigger ways last year. And we're ahead of where we thought we would

The hard work of the last 10 to 15 years of business building began to show up in bigger ways last year.

We're ahead of where we thought we would be at this point.

Speaker 4: And with a record of $112 billion of dry powder, we are well capitalized to invest in opportunities presented by more vulnerable markets and in the evolving macro picture. In summary,

And with a record of $112 billion of dry powder, we are well capitalized to invest in opportunities presented by more volatile markets and in the evolving macro picture.

In summary, we feel incredibly well positioned.

Speaker 4: While we're together today, I also wanted to give you a little color on our annual planning meetings. Last week, we gathered 35 of our partners for two full days to review where we are, where we're going, and what we need to get right to capture the opportunity in front of us. the

While we're together today I also wanted to give you a little color on our annual planning meetings last week, we gathered 35 of our partners for two full days to review, where we are where we're going and what we need to get right to capture the opportunity in front of us.

It was an extremely energizing discussion.

Speaker 4: As we discussed that our investor day last April , we have significant runway in all of our business.

As we discussed at our Investor Day last April we have significant runway in all of our businesses and see the opportunity to meaningfully scale across multiple platforms and markets simultaneously.

Speaker 4: and see the opportunity to meaningfully scale across multiple platforms and markets simultaneously. Inquiry.

Including Asia.

Real estate.

Speaker 4: infrastructure, our course suite of products, private wealth.

Infrastructure, our core suite of products.

Well.

Speaker 4: Growth, impact in ESG, insurance, credit and private equity.

Gross impact and ESG insurance.

And private equity amongst others.

What we discussed last week is that our progress makes us even more confident in the opportunity ahead and what these businesses can become.

Speaker 4: What we discussed last week is that our progress makes us even more confident in the opportunity ahead and what these businesses can become.

Speaker 4: Said another way, we believe we can get to the destination faster than we thought a year ago, and the quantum of the growth opportunity is greater than we anticipated.

Said another way, we believe we can get to the destination faster than we thought a year ago and the quantum of the growth opportunity is greater than we anticipated.

Yeah.

Speaker 4: So while 2021 was a great year for the firm, what's particularly exciting is how the progress we made last year positions us for more growth in the years ahead. And critically, we installed sources of momentum in the hopes of will be achieved in our next chapter.

So while 2021 was a great year for the firm, what's particularly exciting is the progress we made last year positions us for more growth in the years ahead.

And critically Joanne.

Joe and I have never had more confidence in our team.

Speaker 4: We have a focused and highly motivated group driving our businesses and functions and responsible for each of our growth initiatives.

We have a focused and highly motivated group driving our businesses and functions and responsible for each of our growth initiatives.

Speaker 4: So we enter 2022 with significant conviction in our growth prospects, our model, and our people, and look forward to keeping you updated throughout the year.

So we entered 2022 with significant conviction in our growth prospects, our model and our people.

And look forward to keeping you updated throughout the year.

And with that we're happy to take your questions.

Thank you at this time well be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question. Kim You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star.

Speaker 1: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Any interest of time we ask that you each keep to one question and one follow-up.

Any interest of time, we ask that you need to keep to one question and one follow up thank you.

Speaker 1: Our first question comes from the line of Alex Blostin with Goldman Sachs. Please proceed with your question.

Our first question comes from the line of Alex Blaustein with Goldman Sachs. Please proceed with your question.

Speaker 5: thank you morning everybody thanks for taking a question on why why don't we start well with uh... just the the dynamics around fundraising and management to grow uh... and i really kind of wanted to do that in a couple things because first uh... whether or not the current macro conditions are having any impact on opi appetite to allocate to private markets broadly uh... even if it just actically but curious with to hear what you guys hearing on the ground uh... and then secondly you know rob you mentioned a number of fund raising initiatives for twenty twenty two i was hoping you can size how much you expect to raise a gross of thirty plus strategies and ultimately what that means for twenty twenty two management to grow

Hey, good morning, everybody. Thanks for taking the question why why don't we start with just the dynamics around fundraising and management fee growth.

And I'm really kind of wanted to zone in a couple of things I guess first a whether or not the current macro conditions are having any impact on <unk> appetite to allocate to private markets broadly.

Even if just tactically, but curious to hear what are you guys hearing on the ground and then secondly, Rob you mentioned a number of fundraising initiatives for 2022 I was hoping you could size how much you expect to raise across those 30, plus strategies and ultimately what that means for 2020 to management fee growth.

Speaker 2: Hey, Alex, this Craig, why don't I begin? To the first part of your question, really no change in terms of the interest level that our LPs are having from a fundraising side, and it continues to feel like we have a lot of momentum, which is great. Why don't I give a little bit more granularity in terms of all of those areas where we're fundraising to give you a sense?

Hey, Alex it's Craig why don't I begin.

So the first part of your question really no change in terms of the interest level that.

That our Lps are having from a fundraising side and it continues to feel like we have a lot of momentum.

Which is great.

Why don't I gave a little bit more granularity in terms of all of those you know the areas, where we're fundraising to give you a sense of the breadth of that activity for us.

Speaker 2: of that activity for us. Rob obviously ran through the four areas of focus for us in 2022. More narrowly and private equity, we're still fundraising for America's private equity. We're fundraising for our Euro private equity strategy. In growth, fundraising's launched for both the impact and next gen tech strategies. In poor, we're fundraising across the core business.

Rob obviously ran through the four areas of focus for us in 2022 in the.

A more narrowly in private equity, we're still fundraising for Americas private equity, we're fundraising for you or your private equity strategy and growth Fundraisings launch for both the impact of next Gen Tech strategies in core refund raising across the core businesses. So that's core private equity as well as corn for intra and core plus real estate strategies.

Speaker 2: So that's core private equity as well as core info and core plus real estate strategy.

Speaker 2: Now the latter two are open ended in an addition to Core Plus in the US that we've spoken about. We've also launched fundraising for Core Plus real estate in New York, and Asia. Both of those are also open ended. As well as an infrared, we're fundraising continues for the benchmark infrastructure strategy.

Now the latter two of our open ended and in addition to core plus in the U S and we've spoken about we've also launched fundraising for core plus real estate in Europe and Asia. Both of those are also open ended.

As well as an infrared we're fundraising continues for the benchmark infra strategy.

Speaker 2: In real estate, in addition to the core plus strategies and all three geographies, we're fundraising for a stabilized real estate credit strategy and an opportunistic real estate credit strategy as well. In credit, we're active in the US, Europe , and Asia. We're fundraising for lending partners, European revolving credit, Asia credit, asset-based finance, credit opportunities. And that's in addition to a global Atlantic sidecar strategy, our COO business.

In real estate in addition to the core plus strategies and all three geographies, we're fundraising for a stabilized real estate credit strategy in an opportunistic real estate credit strategy as well.

In credit we're active in the U S Europe and Asia.

We're fundraising for lending partners European revolving credit Asia credit asset based finance credit opportunities.

That's in addition to our global Atlantic Sidecar strategy, our CLO business has been active and as we look to raise capital across the leverage credit platforms in our hedge fund partnerships on a more continuous basis and that's all in addition to the suite of democratize products that we have so again really it's I think the overall.

Speaker 2: And as we look to raise capital across the liver, credit platforms and our hedge fund partnerships on a more continuous basis, and that's all in addition to the suite of democratized products that we have. So again, really, I think the overall take away lots of activity, and it just continues to feel like we have a lot of momentum.

Take away lots of activity and it just continues to feel like we have a lot of momentum.

Speaker 4: Yeah, the only thing I would add, Alex, agree with Craig, no change in LP appetite, the only incremental color I'd give.

Yeah, the only thing I would add Alex Greene.

Agree with Craig No change in LP appetite, the only incremental color I'd give.

Speaker 4: anything we're seeing more interest in real assets with yield.

If anything we're seeing more interest in real assets with yield.

Speaker 4: So anything with some inflation protections, so thank infrastructure and real estate. As we've seen inflation expectations go up, we're finding even more interest in those asset classes.

Anything with some inflation protection, so think infrastructure and real estate.

As we've seen inflation expectations go up we're finding even more interest in those asset classes, Rob you want to pick up on the second part Yeah, Hey, Alex.

Speaker 3: As relates to the management fee piece of this, Alex, we've never felt as good as we do right now about our ability to sustainably grow management fees over time.

As it relates to the management fee piece of it Alex we've never felt as good as we do right now about our ability to sustainably grow management fees over time.

Speaker 3: Obviously, reference to $38 billion of capital that hasn't yet flown through our management fee line item, the 30 plus product.

Obviously, I referenced the $38 billion of capital that hasn't yet flown through our management fee line item that 30, plus products you know Craig just went through our relationship with global Atlantic where assets are much higher than where we thought we'd be and frankly, just the new product innovation that's happening across the firm today that gives us the visibility around our ability to grow management fees.

Speaker 3: Craig just went through a relationship with global land where assets are much higher than where we thought we'd be. And frankly, just the new product innovation that's happening across the firm today that gives us visibility around our ability to grow management fees tomorrow. So I think the expectations should certainly be continued management fee growth from us and being able to do so in a sustainable place.

Tomorrow, So I think the expectations and certainly they've made continued management fee growth from us and being able to do so in a sustainable basis over time.

Great. Thanks for that and then just my follow up is around capital management.

Speaker 5: Great, thanks for that. And then just my follow-up is around capital management. So you guys obviously picked up the pace of buybacks so far in the first quarter. Given your comment around the robustness of business going forward, obviously a lot of capacity on the balance of given realizations and embedded gains. How are you thinking about the buyback at this level for the share price and should we think about acceleration and share purchases from you?

So you guys. Obviously, you picked up the pace of buyback so far in the first quarter.

Given your comments around the robustness of the business going forward. Obviously, you have lots of capacity on the balance sheet, given realizations and embedded gains how are you thinking about the buyback at this level for the share price and should we be thinking about acceleration in share repurchases from here.

Speaker 3: Alex, the key for us on capital allocation is to have a consistent approach. And you've heard that for us over the last number of years and we anticipate that continuing. And so as we think about our overall capital allocation strategy, we want to make sure that we're striking the right balance between capital return to shareholders and investing back into KGR for growth.

Alex the key for us on capital allocation is to have a consistent approach and you've heard that for us over the last number of years and we'd anticipate that continuing and so as we think about our overall capital allocation strategy.

We want to make sure that we're striking the right balance between capital return to shareholders and investing back into KKR for growth. So long as that can be done it at high or are we using above our cost of equity so let's take those in order.

Speaker 3: So long as that can be done at high RLE's and above our cost of X.

Speaker 3: So let's take those in order. You would have seen obviously that we just increased our dividend in seven percent, third consecutive years since we became a C-Corp, or we've increased our dividend.

You would've seen obviously that we just increased our dividend, 7% our third consecutive year. Since we became a C Corp. We've increased our dividend and then we want to continue to invest back into take care stock as you said certainly at these levels, we feel really good about our overall body of work on our share buyback, we've repurchased or retired north of 80 million share.

Speaker 3: And then we want to continue to invest back into KKAR stock, as you said, certainly at these levels. We feel really good about our overall body of work on our share by-back. We've repurchased a retired north of 80 million.

Speaker 3: Almost 10% of Kate Gare shares are standing on the 15% of our free float.

Now that's almost 10% of KKR shares outstanding almost 15% of our free float.

Speaker 3: And our goal is to keep our share count flat as it relates to employee dilution. So I think the expectation over time that certainly CSB in the market and acquiring and retiring KGR stock.

And our goal is always to keep our share count flat as it relates to employee dilution. So I think the expectation over time would certainly see us be in the market.

And and acquiring them and retiring KKR stock in terms of balancing that with overall opportunity to grow KKR is a big priority for us to reinvest back into take a or whether that's in M&A are supporting new products or support of new innovation. So long as we're seeing returns that are commensurate with that capital commitment and over the life.

Speaker 3: In terms of balancing that with overall opportunity to grow KKR, it is a big priority for us to reinvest back into KKR, whether that's an M&A or supporting new products or supporting new innovations along as we're seeing returns that are commensurate with that Catholic commitment and over the last number of years we certainly have. So we're gonna continue to have a capital allocation framework that is very much ROE based.

A number of years. So we certainly have so we're going to continue to have a capital allocation framework that is very much ROE based we feel that's a real core competency of ours as we think about moving capital around to the highest ROI opportunity.

Speaker 3: We feel that's a real core competency of ours as we think about moving capital around to the highest our OE opportunity. And if you think about our overall capital allocation framework, I think it's also worth remembering that KKR is an employee basis the single largest shareholder in KKR, so we come at that from a very aligned basis. Great.

And as you think about our overall capital allocation framework I think it's also worth.

Remembering that KKR is an employee basis, the single largest shareholder and KKR. So we come at that from the very aligned basis.

Great. Thanks for all that thanks al Thank you.

Speaker 5: Thank you. Our next question comes from the line of Robert Lee with KVW. Please proceed with your question. Great. Good morning, everyone. Thanks for taking my questions. Maybe first looking at wealth management.

Thank you. Our next question comes from the line of Robert Lee with <unk>. Please proceed with your question.

Great. Good morning, everyone. Thanks for taking my questions, maybe first looking at wealth management.

You know the.

Speaker 5: Generating 30 to 50% of your fundraising from that channel in several years is, you know, pretty big step up, but particularly in light of your overall fundraising. So you may put a little bit more meat on the bone, like,

Generating 30% to 50% of your fund raising from that channel in several years as you know.

The big step up, particularly in light of your overall fund raising so could you maybe put a little bit more meat on the bone like.

Speaker 5: I know you had just hard to new head of global wealth management, but you know whether it's specific products or specific things They kind of give you that confidence, you know sitting here today that next couple of years You can have that magnitude of an increase coming from that channel. I mean what would drive that?

I know you had just hired a new head of global wealth management, but you know whether it's specific products or specific things that kind of gives you that confidence sitting here today that in the next couple of years you can have that magnitude of an increase coming from that channel I mean, what would drive that.

Hey, Rob it's Craig why don't I begin so.

Speaker 2: You know, private wealth is as big a priority as we have as a firm.

You know private wealth is as big a priority as we have as a firm.

Speaker 2: and the addressable market here, because everyone knows as massive, total client assets are estimated to be around $283 trillion. That's pension-funded sovereign wealth, insurance, private wealth combined, and private wealth is almost 65% of that and is growing.

And the addressable market here as everyone knows is massive.

Client our client assets are estimated to be around 280 trillion dollars. That's pension funds sovereign wealth insurance private wealth combined and private wealth is almost 65% of that and it's growing so it's a massive end market, but at the same time allocations as we all know for individual investors is a fraction of what you find.

Speaker 2: So it's a massive end market, but at the same time allocations, as we all know, for individual investors, is a fraction of what you find at institutions.

That institutions.

Speaker 2: individual investors are less than 5% and by our research we actually think that numbers in around 2 to 3%. We have this enormous end market, it's underpainted created with allocations that are increasing. And so it's a huge opportunity and I think as we think of our investment skills, our track record combined with our brand we really think we're exceptionally well positioned to be winner here. And the focus I'd say is really threefold. So.

And so individual investors are less than 5% and by our research. We actually think that number is at around 2% to 3%.

This enormous and end market, that's underpenetrated with allocations that are increasing and so it's a huge opportunity and I think as we think of our investment skills. Our track record combined with our brand. We really think we're exceptionally well positioned to be winter here and the focus I'd say, it's really three fall so one.

Speaker 2: One were focused on our partnerships with private wealth platforms. So in the US, that's the wirehouses, the independent broker dealers, the RIAs. And outside the US, it's the global private banks and the regional private banks.

We're focused on our partnerships with private wealth platforms. So in the U S. That's the wire houses the independent broker dealers. They are as an outside the U S. It's a global private banks and the regional private banks.

Speaker 2: so the business is organized by geography here and you're correct, you've seen some hiring related to that. Second, we're focused on the family capital part. So think about that. Single family offices, multi family, ultra high net worth. And some of those folks are very large and very sophisticated. And again, we're organized by geography here. And then third, we're focused on product creation.

So the business is organized.

If you're here and you are correct you have you seen some hiring related to that.

Second were related were focused on the family capital Park, So think about that single family offices multifamily Ultra high net worth.

Some of those folks are very large and very sophisticated and again, we're organized by geography here.

And then third we're focused on product creation. So historically, we've offered private fund solutions through the private wealth space, but really there are only a limited number of private wealth investors that are qualified who could look at private funds is appropriate. So we're focusing on creating these new investment solutions. These more democratized Prada.

Speaker 2: So historically we've offered private fund solutions through the private wealth space. But really there are only a limited number of private wealth investors that are qualified who could look at private funds as appropriate. So we're focusing on creating these new investment solutions, these more democratized products, democratized solutions that are in a registered fund format and have much wider applicability within the private wealth channel.

Democratize solutions that are in our registered fund format and have much wider flexibility within the private wealth channel.

Speaker 2: So, I think suffice to say when you combine with where we are in the development of the channel, the maturing of our product set, including, and Scott mentioned this a moment ago, all the products that we have with the yields, real assets, et cetera, and put that together with our brand, which is really encouraged with our hardware situated and all of the opportunities that we have ahead of us.

So I.

I think suffice to say when you combined with where we are in the development of the channel.

The maturing of our product set including it and Scott mentioned this a moment ago all the products that we have with the yields.

Real assets et cetera, and put that together with our brand, which is really encouraged with how we're situated in all of the opportunities that we have ahead of us.

Okay, great, Thanks, and maybe as a follow up.

Speaker 5: At least equity marks have been pre-rocky start to the year. So I guess investors are generally concerned about kind of the realization outlook from here. Could you maybe update us and where things are for you guys right now, through the start of the year, the first half of the quarter?

At least equity markets been pretty rock rocky start to the year, So I guess investors.

Generally concerned about kind of the realization outlook from here could you maybe update us on where you where things are for you guys right now we know through the start of the year the first to know.

Half of the quarter in Q1.

Speaker 3: Hey Rob, some good news here. It's a great Q1. We already have a good amount of visibility and there's some pretty meaningful revenue from monetization activity. As of now, that figure is around 700 million, maybe a bit above that. As you know, that's collectively across both our performance as well as our investment income. And as a reminder, that is from deals that are already closed or if it's signed up and that we expect to close in Q1.

Yeah, Hey, Rob.

Some good news here as it relates to Q1, we already have a good amount of visibility into some pretty meaningful revenue for monetization activity.

As of now that figure is around 700 million, maybe a bit about that.

That's collectively across both our performance as well as our investment income and as a reminder, you know that is from deals that are already closed or have been signed up and that we expect to close in Q1. So.

Speaker 3: So we're off to a really good start there. This is one of the strongest figures we've ever had at this stage of the quarter. And then the other, I know, relevant thing for your models is the split is weighted around 75, 25 carry investment income right now. So yeah, we feel like a pretty good start to the year and gives us some support going into Q1 in 2022. Thank you.

So we're off to a really good start there. This is one of the strongest figures we've ever had at this stage of the quarter and then the other.

Relevant thing for your models is the split it's weighted around 70 525, Carey investment income right now.

So yes, we felt like a pretty good start to the year and gives us some support going into Q1 of 2022.

Great. Thanks for taking my questions guys. Thank you Ralph.

Speaker 1: Thank you. Our next question comes from Lyon of Bill Capps with City. Please first you would-

Thank you. Our next question comes from the line of Bill Katz with Citi. Please proceed with your question. Okay. Thank you very much for taking the questions. This morning, So maybe come back to interest rates for a moment I was wondering if you could let us know what is your rate assumption that you have that sort of supports your sort of 12% to 13% Roe.

Speaker 5: Okay, thank you very much for taking the questions this morning. So maybe come back to interest rates for a moment. I was wondering if you could let us know what is your rate assumption that you have that sort of supports your 12 to 13 cent ROE for global panic. And then if rates were to go up, you walk us through what the net impact would be between maybe a higher ROE there versus any impact on management fees. Yeah.

For our global Antic and then if rates were to go up can you walk us through what the net impact would be between maybe higher or are we there versus any impact on management fees.

Yeah.

Hey, Hey, Bill it's Rob Thanks for the question.

Speaker 3: Maybe let's start with where we think interest rates are going. And so...

Maybe let's start with where we think interest rates are going.

And so.

Speaker 3: You know, we do see rates certainly increasing like the rest of the market. I think we're likely to get for more Fed funds increases this year. But at the same time, we do see that coming on the back of robust financial conditions.

We do see rates certainly increasing like the rest of the market I think we're likely to get four more fed funds increases this year, but.

But at the same time, we do see that coming on the back of a robust financial conditions. So our expectation is that we can be an environment here, where real rates are still low or negative over the next couple of years, which I think is that overall positive place for for us to be from a business model perspective.

Speaker 3: So our expectations that we can be an environment here where real rates are still lower negative over the next couple of years, which I think is an overall positive place for for us to be from a business model perspective.

Speaker 3: Now of course there are uncertainties around weights are going but I think there's a number of areas where we're I think pretty well competitively positioned. You know as...

Now of course, there are uncertainties around weights are going but I think theres a number of areas where were I think pretty well competitively positioned you know as you referenced our global Atlantic They are largely bias to benefit from interest rates rising overtime, so $120 billion of capital there as well as how do we think about either individual channel and our ability.

Speaker 3: global land, they are largely biased to benefit from interest rates rising over time. 120 billion dollars of capital there as well as how we think about their individual channel and our ability to be able to generate sales from that channel. We think are all positively biased in a rising rate environment. And so, I think there's a number of other areas around KCR as well where we think we're competitively well positioned. You look at our credit business over 200 or close to 200 billion of AUM.

To be able to generate sales from that channel. We think are all.

Positively biased in a rising rate environment and so.

But I think theres, a number of other areas around KKR as well where we.

We think we're competitively well positioned to look at our credit business over 200 or close to $200 billion that you add a much of our third party business. There is floating rate exposure and in nature. So as interest rates rise all things equal you know our returns go up and the hurdle rates across many of those products tend to be fixed in nature. So the likelihood of earning additional.

Speaker 3: A much of our third party business there is floating rate exposure in nature. So as interest rates rise, all things equal. Our returns go up and the hurdle rates across many of those products tend to be fixed in nature so the likelihood of earning additional in Santa Feases is that much higher. So hopefully that helped answer your question.

Incentive fees is that much higher.

So hopefully that helps answer your question.

Speaker 5: Okay, thanks. Just a follow-up, just coming back to maybe your prior guidance and sort of appreciate the tone and tenor of what you're saying about the confidence. But can you sort of still triangulate back to sort of your guidance for this year in terms of two plus dollars of FRE and so how you think about that not only for this year but maybe into 2023 just give the compounding nature of growth and then maybe to sort of level set where you are in terms of the capital raising flagship of the 100 billion plus certainly well well into that as well. Thank you.

Okay. Thanks, and just a follow up just coming back to maybe your prior guidance sincerely appreciate the tone and tenor of what you're saying about the confidence, but can you sort of still triangulate back to sort of your guidance for this year in terms of two plus dollars of FRE and so how do you think about that and only for this year, but maybe into 2023, just give the compounding nature of growth and.

And then maybe just sort of level set where you are in terms of the capital raising flagship books 100 billion, plus any well well into that as well. Thank you.

Speaker 3: No updates and numbers, obviously we're well ahead of where we thought we would be even six or 12 months ago.

Yeah.

No update the numbers Bell, obviously, we're well ahead of where we thought we would be even six or 12 months ago.

Speaker 3: And as it relates to both fundraising as well as management fee growth, this isn't just a result of acceleration of fundraising.

And as it relates to both fund raising as well as management fee growth.

This isn't just a result of acceleration of fund raises.

Speaker 3: In many cases we have well exceeded the expectations that we have for ourselves.

Many case, we have well exceeded the expectations that we have for ourselves and so we continue to see a robust environment to be able to raise capital and.

Speaker 3: And so, we continue to see a robust environment to be able to raise capital. And as I mentioned earlier, we continue to see environment where we should be able to really drive substantial management fee growth as well as FRE growth off of a basic $2.23. So we should be well ahead of our target for 2022 that we laid out, I think was about 12 months.

As I mentioned earlier, we continue to see environment, where we should be able to really drive substantial management fee growth as well as FRE growth off of a base of $2.23.

So we should be well ahead of our target for 2022 that we laid out I think it was about 12 months ago.

Speaker 4: Yeah, the only thing I'd add, the last quarter we said, we thought we could double fee related earnings and TDE over the next five years. That's still very much.

The only thing I'd add those last quarter, we said, we thought we could double.

Related to earnings and TD over the next five years, that's still very much the case.

Speaker 4: So you know no updated guidance for 22, but suffice it to say we we well exceeded what we told you a year ago

So no updated guidance for 'twenty, two but suffice it to say we are we well exceeded what we told you a year ago.

Okay. Thank you.

Yeah.

Yes.

Speaker 1: Thank you. Our next question comes from Lyon. I'm Glenn Shore with RECORE-ISI. Please proceed with your question. Thank you.

Thank you. Our next question comes from the line of Glenn Schorr with Evercore ISI. Please proceed with your question.

Hello there.

Hello So.

It's been a slower start to the year for just capital markets activities early but but if you look at all the pipelines for M&A and Ipos.

Speaker 6: It's been a slower start to the year for just capital market activity. It's early, but if you look at all the pipelines for MNN.

Down I think that's just that.

Speaker 6: market-ditters thing. But anyway, with the slower pipelines, just curious how insulated you think you just gave us a number on dollars for realization pipeline, but just broader picture as you look at the year, how susceptible could a realization pipeline or capital markets pipeline may or may not?

Market Jitters thing, but anyway.

With the slower pipelines just curious how insulated do you think you just gave us the number on a dollars a foot realization pipeline, but just broader picture as you look at the year, how susceptible cut our realization pipeline.

Our capital markets pipeline may or may not be to that and in the past you've given some what you think the core run rate of transaction and monitoring fees or type of markets that'd be helpful.

Speaker 6: And in the past, you've given some, what you think, the core run rate of transnational monitoring fees or capymorps.

Is that right Rob.

Thanks, Doug.

Speaker 3: So, let's, I think it's worth spending a little bit time on our capital markets business. It did have a really a step function increase in 2021. I think if you take a step back, our capital markets business over the last several quarters has averaged about $200 million of revenue per quarter. Now markets have definitely been open and compliant, but I think we've also continued to really take share here.

But let's I think it's worth spending a little bit of time on our capital markets business. It did have a really.

<unk> function increase in 2021.

Take a step back our capital markets business over the last several quarters has averaged about $200 million of revenue per quarter I know markets have definitely been open and imply it but I think we've also continued to really take share here.

Speaker 3: So I think that's, as you think about our business, and in a market environment where capital is being deployed, it can be still a relatively volatile market environment. But in one way, there's activity. We think that's a reasonable run rate for our business. But much more.

So I think that as you think about our business and in a.

Market environment, where capital is being deployed it can be still a relatively volatile market environment, but in one where there's activity. We think that's a reasonable run rate for our business, but much more important for US is how do we take our business from the $850 million of revenue in 2021 and over the next several years continued to take a lot of share.

Speaker 3: is how we take our business from the $850 million revenue in 2021. And over the next several years, continue to take a lot of share and grow that in a meaningful way. And we think we've got plans in place to be able to do that. We've gone through these a bunch of times, so it includes your phone KKR in terms of its own product, expansion, phone KKR is in terms of its own geographic expansion. We think, by hiring the right capabilities internally, that could lead to a lot of revenue growth.

I grow that in a meaningful way and we think we've got plans in place to be able to do that.

Got through these a bunch of times and it includes fallen KKR I in terms of its own product expansion fallen cake hours in terms of its own geographic expansion, we think by hiring the right capabilities internally that could lead to a lot of revenue growth and I think it's worth calling out or non take care of our issuer business. Our third party business it generated almost 200.

Speaker 3: And I think it's worth calling out our non-KKR issue or business, our third party business. It generated almost $200 million of revenue in 2021. And I think that really speaks to our business model and the quality of our people that we were able to take that business and scale to the point that it's not too different from a revenue perspective from where our capital markets was, business was an aggregate, not too long ago. yeah,

$3 million of revenue in 2021, I think that really speaks to our business model and the quality of our people are that we were able to take that business and scale to the point that.

There is not too different from a revenue perspective from where our capital markets business was in aggregate you know not too long ago.

Hey, Glenn it's correct we were.

Looking at some of the statistics in there kind of interesting.

Speaker 2: just to give you another sense of the breadth and capital market sees. And when you look at deployment for us as a firm, if the deployment increased materially, obviously, we were $30 billion in 2020, $70 billion in 2021.

Just to give you another sense of the breadth and.

Capital markets fees, you know when you look at deployment for us as a firm is deployments increased materially obviously, we were $30 billion in 2020 $70 billion in 2021.

Speaker 2: And if you look at where that came from and the impact of that, it had a big impact on capital markets revenue.

And if you look at where that where that came from and the impact that it had a big impact on <unk>.

Capital markets revenues. So you know that increase in deployment for us it really didnt come from private equity, we invested $10 million in 2020, we invested $10 two in 2021.

Speaker 2: So, you know, that increase in deployment for us, it really didn't come from private equity. So we invested $10 billion in 2020. We invested $10.2 in 2021.

Speaker 2: So KCMC's from capital markets went from 2.30 to 250 in the year. Like they were up modest.

So Casey M sees from capital markets went from $2 30 to $2 50 in the year like they were up modestly.

Speaker 2: Well, you really saw the big driver when you add up deployment for us in infrastructure, core private equity growth.

What you really saw the big driver when you add up deployment for us in infrastructure core private equity growth.

Speaker 2: and real estate equity. So these are the areas that are going to generate on deployment, can generate sizable capital markets fees. That deployment for us went 2.3x, went up 2.3x in 2021, and capital markets fees, cumulatively, similarly, went up 2.3x, went from 100 to $1,000,000,

And real estate equity. So these are the areas that are going to generate unemployment can generate sizable capital market fees.

That deployment for us when two three X went out to three acts in 2021 .

In capital markets fees cumulatively. Similarly went up to three acts went from 150 to about 350. So it is a.

Speaker 2: So it is a, you know, the dynamic that you have is one word deployment. So you're coming a lot more broad base.

The dynamic that you have is one where deployment so becoming a lot more broad based and again Casey M is not solely going to be based on how we're deploying capital, but it's certainly going to be one of those factors.

Speaker 2: And again, KCM is not solely going to be based on how we're deploying capital, but it's certainly going to be one of those factors. So I think really in that number, as Rob said, you're seeing a real development in footprint in the framework of the firm, which is exciting from a management fee standpoint. And it's also exciting from a capital.

So I think really in that number as Rob said Youre seeing a real development and footprint in the framework of the firm, which is exciting from a management fee standpoint, and it is also exciting from a capital market standpoint, Hey, Glenn one other I know you had referenced the impact of the capital markets environment, having modernizations.

Speaker 3: One other, I know you get a reference, you know, the impact the cap of markets environment have on monetization.

Speaker 3: I think the big advantage here is we come into 2022 with over $15 billion.

I think the big advantage here as we come into 2022 with over $15 billion.

Speaker 3: of embedded revenue that sits in our balance sheet between Grossson Realized Carry and the Embedded Game.

Embedded revenue that sits in our balance sheet between gross unrealized carry and the embedded gains of our investment portfolio.

Speaker 3: of our investment portfolio. And, you know, I'm a Q1 and we're all off to a good start from the monetization perspective. A good example of that, we don't need straight line markets up to be able to monetize.

And I.

I think Q1, and we are off to a good start from a monetization perspective, a good example of that we don't need straight line markets up to be able to monetize.

Speaker 3: that $15 billion of embedded revenue, but what we will need is we will need a market environment that does have the stability over periods of time and is flexible in nature. And I think there's going to be areas where we're going to be able to continue to pick our spots in this kind of a market environment and generate monetizations for our shareholders.

That $15 billion of embedded revenue, but what we will need as we will need.

A market environment that does have some stability over periods of time and is flexible in nature.

There's going to be areas, where we're going to be able to continue to pick our spots in this kind of a market environment and generate monetization for our shareholders.

Great I appreciate all of that thank you.

Thank you.

Thank you. Our next question comes from the line of Gerry O'hara with Jefferies. Please proceed with your question.

Speaker 1: Thank you. Our next question comes from line of Gerry O'Harrer with Jeffries. Please proceed with it.

Great. Thanks, Thanks, and good morning, hoping we could get an update just on the strategic investments within our within your kind of perpetual capital sleeves, clearly a nice uptick year over year, but you know.

Speaker 4: Great, thanks. Thanks a good morning. Hoping we could get enough data just on the strategic investments within your kind of perpetual capital.

Speaker 7: Clearly a nice uptick year over year, but perhaps you can talk about some of the drivers of that increase and what we might be able to expect on a go-forward basis.

Perhaps you can talk about some of the drivers.

That increase and what we might be able to expect on a go forward basis.

Yeah.

Speaker 2: I think the age area is great. You know, very broad-based again.

Well I think Jerry it's Craig.

Broad based again.

Speaker 2: I think when you look at a lot of the, you know, core is an example area for us.

I think when you look at a lot of the core is an example area for us.

Speaker 2: from a perpetual standpoint where we're raising capital infrastructure real estate as I mentioned to aspects of both Europe and Asia real estate, perpetual or capital is going to be perpetual in nature.

In from a perpetual standpoint, where we're raising capital infrastructure real estate as I mentioned in the next two aspects of it.

Of both Europe , and Asia real estate perpetual or capital is gonna be perpetual in nature.

Speaker 2: Global Atlantic by itself continues to grow in scale in addition to that, which is great. And I think we've over time also mentioned these longer dated strategic type partnerships.

Organic by itself continues to grow and scale in addition to that.

With which is which is great and I think we've over time also mentioned these longer dated.

Strategic type partnerships.

Speaker 2: that activity continues as multi-ASA class.

That activity continues its multi asset class.

Speaker 2: It's again capital where you can have recycling which can be very valuable from an economic standpoint. You're not going to see that activity from us every quarter. But again those dialogues continue and we'll keep you up to date and abreast.

It's again capital, where you can have recycling, which can be very valuable from an economic standpoint.

You're not going to see that activity from us every quarter, but again those dialogues.

And we'll keep you up to date and abreast on that.

Speaker 3: If you look at page five on our press release, you can see a perpetual capital. It was up year on year over seven times. Now a lot of that is global Atlantic. But what we don't want to get lost in that slide is that X-global Atlantic, our perpetual capital year on year was still up four times versus this time last year. And so there's a lot of momentum across that part of it.

Hey, Joe one other thing if you look at page five on our press release, you can see a perpetual capital it was up year on year over seven times now a lot of that is global Atlantic. Although we don't want to get lost in that slide is that ex global Atlantic our perpetual capital year on year was still up four times versus this time last year and so theres a lot of momentum.

Across that part of our business.

Great. That's helpful and then just as a follow up.

Speaker 7: Great, that's helpful. And then just as a follow up, appreciate the thoughts around the private wealth channel. But as it relates to sort of investment, I think last quarter you talked about sort of looking to triple headcount, if might not it's a right, and continuing to sort of invest in operations and technology. Can you, you know, perhaps give us an update on how things have progressed there and how we're tracking relative to perhaps where you were last quarter? Thank you.

Appreciate the thoughts around the private wealth channel, but as it relates to sort of investment I think last quarter, you talked about sort of looking to triple head count. If my notes are right and continuing to sort of invest in operations and technology can you, perhaps give us an update on how things have progressed.

There and you know.

How how we're tracking relative to perhaps where you where you were last quarter. Thank you.

Speaker 2: You're right, Craig. So we don't really want to get in the habit honestly of giving individual head count updates on a part of the business and where we are from that. But again, suffice to say this part is a real strategic priority for us as we've spoken about. And there's lots of underlying activity and growth. We feel really well positions. And we're very active as it relates to hiring talent on a global basis. Hope that that gives you a clear sense of the importance for us.

Hey, Jerry it's Craig So we don't really want to get into habit honestly of giving individual head count.

Updates on a on a part of the business and where we are from that but again suffice to say.

This part is a is a real strategic priority for us as we've spoken about.

And there is lots of underlying activity and growth.

We feel really well positioned and where we're very active as it relates to hiring talent on a global basis.

I hope that that gives you a clear sense of the importance for us.

Fair enough. Thanks for taking my questions. This morning.

Thank you.

Speaker 1: Thank you. Our next question comes from Lyon of Craig Seagantallar with Bank of America. Please proceed with your question.

Thank you. Our next question comes from the line of Craig Siegenthaler with Bank of America. Please proceed with your question.

Hey, good morning, everyone.

Morning.

So my question is on global Atlantic I, just wanted to get an update on your progress to reinvest global Atlantic portfolio into KKR originated product.

Speaker 8: So my question is on global Atlantic. I just want to get an update on your progress to reinvest global Atlantic portfolio into KK-originative product, and also how this could or will impact your blended fee rate as GA reaches your longer term objective.

And also how this could or will impact your blended fee rate.

As <unk> reaches your longer term objective.

Yeah, Hey, Greg it's Rob.

Speaker 3: So that's going to be a multi-year process, and we're going to do it in a very prudent way, and make sure that we're...

So that's going to be a multiyear process and we're going to do it in a very prudent way and make sure that we're rotating G as balance sheet from quality investments that they have today and to opportunities for KKR to be able to invest that capital.

Speaker 3: GAs balance sheet from quality investments that they had today into opportunities for KGR to be able to invest that capital with a similar better risk level and at an increased yield. And so that process is taking place. And I would say 11 months in, we're probably in a better place than we thought would be at the beginning of the deal, but there's no doubt.

With a similar or better risk level, and an increased yield and so that process is taking place and I would say you know 11 months and we're probably in a better place than we thought we'd be at the beginning of the deal, but there's no doubt.

As we complete that rotation or we make progress on that rotation, that's going to increase the blended management fee rate in our overall relationship with global Atlantic I think that blended management fee rate today is in the mid teens and so it definitely has the ability to go up over time based on the rotation that you referenced.

Speaker 3: We complete that rotation or we make progress on that rotation that's going to increase the blended management fee rate in our overall relationship with global Atlantic. I think that blended management fee rate today is in the mid-teens.

Speaker 3: So it definitely has the ability to go up over time based on the rotation that you see.

Speaker 4: The only thing I'd add Greg is that it's going to be a constantly evolving answer to your question because if you think, especially as global Atlantic pursues block activity...

The only thing I'd add Greg is that it's gonna be a constantly evolving answer to your question is as you think especially as global Atlantic pursues block activity.

Speaker 4: bring on more assets and then those blocks need to be rotated themselves. So I'm not sure we'll ever reach stasis, frankly.

Bringing on more assets and then those blocks needs to be rotated themselves. So I'm not sure we'll ever reached stasis frankly.

Speaker 4: Rob's point where better how to where we thought we'd be and we'll keep you updated but the block activity obviously been significant

To Rob's point, we're a bit ahead of where we thought we'd be and we will keep you updated but the block activity has obviously been significant since we signed the deal.

Thanks, Scott and Rob and just one other question on that one.

Speaker 8: thanks god and rob and uh... just one one other question on that one what assets uh... or kk originated assets are being allocated into global land today

What assets or KKR originated assets are being allocated into global Atlantic today.

Speaker 3: Yeah, it's a lot across our real estate credit franchise.

Yeah, it's a lot across our real estate credit franchise.

Speaker 3: our private credit franchise, structured finance, asset-based finance, those are really the big areas of opportunity that we're working together with the GA team.

Private credit franchise structured finance asset based finance those are really the big areas of opportunity that we're working together with the G. A T M.

Okay.

Got it thank you very much thanks, Greg.

Speaker 1: Thank you. Our next question comes from the line of Devon Ryan with JMP Securities. Please pursue your questions.

Thank you. Our next question comes from the line of Devin Ryan with JMP Securities. Please proceed with your question.

Hi, This is Brian Mckenna for Devin So there's clearly a lot of momentum across the entire platform and I. Appreciate all the color on the outlook, but what do you think will be the biggest driver of growth over the next five years and then what products will be the biggest contributor to achieving your FRE and de targets of $4 plus and $7 plus.

Speaker 8: Hi, this is Brian McKenna for Devon. You know, so there's clearly a lot of momentum across the entire platform. And I appreciate all the color on the outlook, but what do you think will be the biggest driver of growth over the next five years? And then what products will be the biggest contributor to achieving your FRE and DE target? The $4 plus and $7 plus.

Speaker 3: Yeah, hey Brian , it's Rob. I'll take a first shot at it. Reality is we've got a lot of confidence across many parts of our business. I'll call it a few and we talked about them on our prepared remarks.

Yeah, Hey, Brian It's Rob I'll take a first shot at it. The reality is we've got a lot of confidence across many parts of our business I'll call. It a few and we talked about them on our prepared remarks.

Speaker 3: Asia is a really massive long-term opportunity for us. And we talked about in the past that we think we could take our Asia business and make it one day as big as our North America.

Asia is a.

Really massive long term opportunity for us and we've talked about in the past that we think we can take our Asia business and make it one day as big as our North America business. That's for a couple of reasons. One we think more than global excuse me half of global growth is going to come out of that region over the next several years to we have a huge head start and competitive advantage.

Speaker 3: That's for a couple of reasons. A one, we think more than global, excuse me, half of global growth is going to come out of that region over the next several years. Two, we have a huge head start and competitive advantage.

Speaker 3: versus our competitors and really the key for us is to take our leading position there with our leading position across infrastructure real estate Cratic growth equity on a global base and the marriage of those two things and we think that could lead to a lot of growth for us in that part of the world We've got five products X private equity. They'll be fundraising for capital in Asia in 2022 So that's really a big theme for us, you know what we're doing across real assets and real estate and infrastructure We think is really exciting

Versus our competitors and really the key for US is to take a leading position there with our leading position across infrastructure real estate credit growth equity on a global basis. The marriage of those two things and we think that could lead to a lot of growth for us in that part of the world. We've got five products ex private equity there'll be fundraising for capital in Asia in 2000.

22, so that's really a big theme for us what we're doing across real assets and real estate and infrastructure. We think is really exciting.

Speaker 3: We've talked about our build out of private wealth. So there's a number of different avenues and ways that we have to be able to achieve P&L growth over the next several years.

We've talked about our build out of private wealth. So theres a number of different avenues in ways that we have to be able to to achieve a P&L growth over the next several years.

Speaker 4: Yeah, Brian Scott. Yes, yes. Thanks for asking the question. It's kind of fun to answer, honestly, because when we talked about last April , we just got a lot on. You know, we went from sticks to something like 28 investing strategies over the last decade plus.

Yeah, Brian It's Scott.

Thanks for asking the question, it's kind of fun to answer honestly, because we talked about last April .

Just got a lot on.

We went from six to something like 28 investing strategies over the last decade plus.

Speaker 4: So it's kind of the answer to your question, it's hard to be succinct, frankly. You know, we got to scale everything we started, which is a long list of asset classes, real estate infrastructure, growth, insurance, core, you know, the list goes on and on. We have an opportunity to meaningfully...

So it is going to answer your question, it's hard to be succinct frankly.

We got we got to scale everything we started which is a long list of asset classes real estate infrastructure.

Both insurance core.

List goes on and on.

We have an opportunity to meaningfully expand our client base.

Speaker 4: We talked about private wealth a lot today, but there's a lot happening also in the institutional channels. We're creating new growth vectors, so not just the existing 28, but you're going to see more things from us in terms of other ways that we can grow.

We talked about private wealth of lots of day, but there's a lot happening also in the institutional channels were creating new growth vectors. So not just the existing 28 or you're going to see more things from us in terms of other ways that we can grow.

Speaker 4: I think smart M&A is going to continue to play a real role here. Not only expanding through global Atlantic, but we're also looking at other acquisitions, and then having the balance sheet and a currency gives us real tools to accelerate our growth. So we've got lots of opportunities to scale.

I think smart M&A is going to continue to play a real role here not only expanding through global Atlantic, but we're also looking at other acquisitions and then having the balance sheet and a currency gives us real tools to accelerate our growth. So we've got lots of opportunities to scale and.

Speaker 4: and we haven't even hit all of them today. I'm not sure we're gonna be able to identify one or two biggest drivers. I think it's gonna come from a lot of different places. And part of the reason you hear such confidence in our voices to double again, after we double them such a short period of time, is everything I just...

And we haven't even hit all of them today I'm not sure we're going to be able to identify one or two biggest drivers I think it is going to come from a lot of different places and part of the reason you hear such confidence in our voices to double again after we doubled in such a short period of time is everything I just mentioned.

Yep got it I appreciate all the color there.

Speaker 8: Yep, got it. Now, appreciate all the color there. And then just two quick modeling questions for Rob. How should we think about margin expansion in 2022 relative to 2021? And then is there any updated guidance beyond the tax rate moving forward?

And then just two quick modeling questions for Rob how should we think about margin expansion in 2022 relative to 2021, and then is there any updated guidance on the tax rate moving forward.

Yeah, I'll start with the second one what we you know our tax rate. This year was a little over 17% and what we said over time is we would expect that to migrate up the statutory rate in the low twenties as it relates to margin we've talked about operating in the low Sixty's Q4, we were at 63 in 2021, we were at 63, so a little bit ahead of where.

Speaker 3: Yeah, I'll start with the second one. What we, you know, our tax rate this year was a little over 17% and what we said over time is we would expect that to migrate up to the statutory rate in the low 20s.

Speaker 3: As it relates to margin, we talked about operating in the low 60s. In Q4, we were at 63 and in 2021, we were at 63. So a little bit ahead of where we thought we would be, we're investing a lot back into the firm right now. So I think low 60s is the right level to think about in the near term. But we believe over the medium term that we could take our margin to the mid 60s on a sustainable basis if we're able to execute on the revenue opportunity in front of us. And so that's what we're very much focused on as we continue to invest back into the business.

We thought we would be we're investing a lot back into the firm right. Now so I think low sixty's is the right level to think about it in the near term.

But we believe over the medium term that we could take our margins in the mid sixties on a sustainable basis, if we're able to execute on the revenue opportunity in front of us and so that's what we're very much focused on as we continue to invest back into the business.

Thank you guys.

No.

Thank you. Our next question comes from the line of Brian Bedell with Deutsche Bank. Please proceed with your question.

Speaker 1: Thank you. Our next question comes from Line of Ryan Bidow with Deutsche Bank. Please pursue.

Speaker 4: Great, thanks, good morning folks. Thanks for taking my question. We just took back on the retail side of the 50 billion in private welfare assets right now. You're able to break that out between what you would call democratized products. I know those are still very much in development, but just to try to get a sense of how you're thinking about that fundraising and retail from new...

Great. Thanks, Good morning folks thanks for taking my question.

Just back on the retail side of the 50 billion in private wealth assets right now.

So to break that out between what you would call democratize products and I know those are still very much in development, but just trying to get a sense of how youre thinking about that fund raising in retail from new.

Speaker 4: products, you mentioned obviously some products on the yield side, gaining attention.

I'm Scott you mentioned, obviously some products on the yield side gaining attention.

Speaker 4: Maybe just a flavor of that growth path of that, you know, 10, 20% to 30 to 50. Maybe even just in the next one to two years, what kind of...

Maybe just a flavor of that growth path of that.

That 10% to 20% to 30 to 50, maybe even just the next one to two years what kind of.

Speaker 4: AUM you think you could raise in new democratized products in retail. And then to what extent, you know, would there be significant place been fees attached with the...

You think you could raise.

In new democratized products in retail and then to what extent you know would there be significant placement fees attached.

With the retail side of that.

Hey, Brian It's Craig why don't I start.

Speaker 2: Hey, Brian , it's Craig. What do I start? Well, in terms of where we are today, we have three broad, democratized solutions that are on a bunch of different platforms in addition to the spoke solutions that are tailored for individual platforms. To your first question, we have about 5 billion of AUM across that family, if you will. And we do believe over time that we'll have democratized products really across all over ethical.

In terms of where we are today, we have three broad democratized solutions that are on a bunch of different platforms.

In addition to bespoke solutions that are tailored for individual platforms.

To your first question, we have about 5 billion of AUM.

Across that that family, if you will and we do believe over time.

That will have democratized products really across all of our asset classes.

Speaker 2: And alongside of that, we're going to continue to invest in sales marketing, data, digital talent, etc. And alongside of where we are today, we do expect we'll see these products launched on additional platforms over the course of the year, which will be additive to all of us.

And alongside of that we're going to continue to invest in sales marketing data digital talent.

Et cetera.

And alongside of where we are today, we do expect we'll see these products launched on additional platforms over the course of the year.

She will be additive to all of this so you know it it feels like collectively we're off to a great start.

Speaker 2: So, you know, it feels like collectively we're off to a great start. It still feels to us like we're in the earliest stages.

It still feels to us like like we're in the earliest stages.

Speaker 2: You know, one of those products that seems to be taking or having a lot of mind share, you know, we only began accepting capital in June . It's off to a great start. That's a crest start in the real estate business.

One of the one of those products that seems to be taking out or having a lot of mind share you know, we only began accepting capital in June .

It's off to a great start that's crashed start in the real estate business. So it just feels like we have a lot of momentum.

Speaker 2: So it just feels like we have a lot of momentum, which is really exciting for us. We don't have any breakdown of democratized products for you.

Which is really exciting for us we don't have any breakdown of of democratize products for you in terms of where we think.

Speaker 2: terms of where we think that number could grow. There's certainly lots of data points out there that highlight the opportunity and again just giving the investment we have the brand investment performance. We think we're really well positioned to be a big winner in a massive end.

That number could grow.

There's certainly lots of data points out there that highlight.

The opportunity and again just given the investment we have the brand investment performance. We think we're really well positioned to be a big winner in in a massive end market.

Fair enough and then just on the follow up just the timing of a couple of things.

Speaker 4: And then just on the follow up, just the timing of a couple things, the expectation of the 38 billion that's not a remanagement sees now, over what time frame do you expect that to move into see paying a U.M. and then the drive powder also.

Your expectation of the 38 billion that centers management fees now.

Over what timeframe do you expect most of that to move into fee paying AUM and then the dry powder also 112 billion.

Speaker 4: 112 billion, you know, almost double on what it was six quarters ago.

Most double what it was six quarters ago as you raise product.

Speaker 4: As you raise product, should we be thinking of that deployment and that drive pattern running down in terms of how you're seeing opportunities to invest that you can start with in the call?

Should we be thinking about deployment of that dry powder running down in terms of how you're seeing opportunities to invest that you'd consider.

Or is it possible that that drop headroom to continue to build given your fundraising.

Speaker 4: Or is it possible that that drug pedagol can you to build given your fundraising?

Yes.

Speaker 3: Hey, Brian , it's Rob. So on the first part of your question, I'd say in that 38 billion, I mean, it's a mix of different things. In some cases, it's some investment products where the fee turns on when you invest it and some of those have lives.

Hey.

Bryan it's Rob so on your on the first part of your question I'd say in that $38 billion I mean, it's a mix of different things in some cases at some investment products, where the feed turns on when you invest it in some of those have lives of three.

Speaker 3: you know, three, four, five years from an investment period perspective. And so I think about that on a blended basis of about three years. And some of the other products, it's just capital we've raised and funds that we haven't yet turned on. And so we would think that that's, you know, more in the next, you know, three, six.

345 years from an investment period perspective, and so I would think about that on a blended basis of about three years and some of the other products. It's just capital. We've raised some funds that we haven't yet turned on and so we would think that that's you know more in the next three six you know ash month timeframe. So I think on a blended basis a couple of years overall.

Speaker 3: you know, a shaman timeframe. So I think on a blended basis, a couple of years overall, feels like a reasonable assumption for that 38 billion, maybe a little bit inside of that. And then as it relates to the dry powder, it's a tough question to answer. It is really a function of how active the investment environment is, coupled with our fundraising activity. And so I think what you've heard from us a number of times on this call is the excitement we have for future fundraising.

Feels like a reasonable assumption for that $38 million, maybe a little bit inside of that and then as it relates to the dry powder. That's a tough question to answer it is really a function of how active the investment environment is coupled with our fundraising activity and so I think what you've heard from US a number of times on this call.

Is the excitement we have for future fundraising.

Speaker 3: At the same time, you know, in these all-till markets, we think the opportunity for us to be leaning in from an investment perspective might get more in.

At the same time you know in these <unk>.

Also markets, we think the opportunity for us to be lean and get from an investment perspective might get more interesting.

Speaker 3: And so I think it'll just be a balance of those two things. Hard to be prescriptive about where that number goes over the next public.

So I think it'll just be a balance of those two things it's hard to be prescriptive about where that number goes over the next couple of quarters.

Speaker 4: Thank you probably color

Sure no. Thank you for all the color.

Thank you.

Speaker 1: Thank you. Our next question comes from Line of Michael Cypress with Morgan Stanley . Please proceed with your question.

Thank you. Our next question comes from the line of Michael Cyprus with Morgan Stanley . Please proceed with your question.

Oh, Hey, good morning, Thanks for taking the question wanted to circle back to a comment Scott had made Scott you had mentioned that the quantum of opportunity was greater than anticipated I'd just be curious to hear your perspectives on why that's been the case, what's changed across the industry over the past 12 to 18 months and as you look forward are there any sort of.

Speaker 6: Hey, good morning. Thanks for taking the question. Once there's circled back to comments, got headmaids, got you had mentioned that the quantum of opportunity was greater than anticipated. I just be curious to hear your perspectives on why that's been the case, what's changed across the industry over the past 12, 18 months? And as you look forward, are there any sort of risk to the outlook that you're paying attention to, either regulatory wise, clearly there's been some movement there or on the macro front, just curious your perspective?

Risk to the outlook that you were paying attention to other regulatory wise clearly theres been some.

Our movement, there or on the macro front just curious your perspective there.

Thanks for the question Michael Yeah, I think I think part of it is let me take you back to kind of the strategy that we laid out last April .

Speaker 4: Thanks for the question, Michael. Yeah, I think part of it is, let me take it back to kind of the strategy that we laid out last April .

Which is that we said that they only wanted to be in businesses, where we thought we already were or it could get to be top three in the world.

Speaker 4: which is that, you know, we said that we only wanted to be in businesses where we thought we already were or could get to be top three in the world. And we wanted to just...

And we wanted to stay focused in those areas and I think part of the reason you hear us saying now that we think the quantum of the opportunity is greater than we anticipated.

Speaker 7: And I think part of the reason you hear us saying now that we think the quantum of the opportunity is greater than we anticipated is the end markets that we're facing off against are growing quite rapidly.

As you know the end markets that we're facing off against a growing quite rapidly and we're finding investor appetite not only from the traditional sources, but new sources are increasing faster than we'd anticipated.

Speaker 9: we're finding investor appetite not only from the traditional source

Speaker 9: But new sources are increasing faster than we did.

Speaker 9: So end markets are growing very quickly and more and more people are investing in whoops.

End markets are growing very quickly and more and more people are investing in what we do.

And so that's kind of part one to the answer to your question as to why the quantum is greater than we'd anticipated we already expected growth I think it's a bit more than we expected.

Speaker 9: And so that's kind of part one to the answer your question is to why the quantum is greater than we'd anticipated. We already expected growth. I think it's a bit more the...

The other thing I'd say is that we are approaching top three faster than we'd anticipated and some of these asset classes.

Speaker 9: The other thing I'd say is that we are approaching top three faster than we'd anticipated.

Speaker 9: And a lot of that's on the back of good investment performance and you know building light and trust with a broader

And a lot of that is on the back of good investment performance and building like and trust with our broader client base and so the end opportunities bigger than probably we thought and we're getting there more rapidly than we thought.

Speaker 9: So at the end, opportunity is bigger than probably we thought, and we're getting there more rap.

Speaker 9: And so the definition of top three in terms of what that means, and it's a magnitude of AUM revenue profitability, is therefore bigger than what we anticipated probably 12, 18 months ago. You know, the risks.

So the definition of top three in terms of what that means in terms of magnitude of AUM revenue profitability is therefore, a bigger than what we'd anticipated probably 12 18 months ago.

The risks I think are pretty straightforward, we've got to execute it's a pretty straightforward business when you back up here.

Strong investment performance and you have products that our clients want to invest in and they like you and they trust your judgment and you performed for them through a cycle.

Speaker 9: She has strong investment performance and you have a product.

Speaker 9: that clients want to invest in and they like you and they trust your judgment, and you perform for them through a cycle. It's very straightforward to scale. So a lot of the risks, and this is one of the reasons we like our business so much, it's on us. We've got execution in front of us. We just need to perform.

Its a very straight it's very straightforward to scale. So a lot of the risks and this is one of the reasons, we like our business. So much it's on US we've got execution in front of US we just need to perform.

Speaker 9: I think a big part of the reason you've seen us scaling so rapidly is we've had really strong investment performance at the same time that we've been operationalizing a broader client base.

A big part of the reason you've seen the scaling. So rapidly is we've had really strong investment performance at the same time.

We've been operationalized, a broader client base.

Speaker 9: And we do see a significant amount of running room on both of those tops.

And we do see a significant amount of running room on both of those topics. So I know there's been a couple of questions today about market volatility and it's been a little more bumpy beginning of this year than what we saw last but from our standpoint that tends to be quite good news. We've talked about the 112 billion of dry powder. If we can invest into volatility that tends to create long term.

Speaker 9: So I know there's been a couple questions today about market volatility and it's been a little more bumpy beginning of this year than what we saw last, but from our standpoint, bed tends to be quite good news. We've talked about the 112 billion of dry powder. If we can invest into volatility, that tends to create long-term opportunity for us.

Opportunity for us in terms of incremental revenue and profit down the road, so long way of saying, we really like the way we're positioned right now.

Speaker 9: in terms of incremental revenue and profit down the road. So long way of saying, we really like to weigh where position right now. Little volatility is probably good for our business long term. And the opportunity ahead is significant.

It's a little volatility is probably good for our business long term and the opportunity ahead is significant.

And just on the regulatory point, just just any sort of thoughts there around the potential for regulatory changes enhanced transparency around fees et cetera.

Speaker 6: And just on the regulatory point, just any sort of thoughts there around potential for regulatory changes, enhanced transparency around fees, et cetera.

Look I think.

No.

The level of regulatory scrutiny of our space is probably.

Speaker 9: The level of regulatory scrutiny of our space is probably a positive for larger players that are more institutional.

Positive for larger players that are more institutionalized.

Speaker 9: And so, you know, there's the aspects of how the regulatory environment's developed, but I think the barriers to entering our space have gone up, and that's good for incumbent players. So, nothing that we see that, you know, I would call out today, our job is to react to what the regulators talked us about, and so far we actually think it's been, you know, long-term helpful to work.

And so there's aspects of how the regulatory environment has developed that I think the barriers to entry in our space have gone up and that's good for incumbent players.

So nothing that we see that I would call out today, our job is to react to what the regulators talk to us about and so far we actually think it's been long term helpful door business.

Great and just a quick clean up question for Rob If I could just hoping you might be able to update us on the amount of capital that was invested off the balance sheet in 'twenty, one and realizations as well off the balance sheet in 2021, and how that compared to 2020.

Speaker 6: Great, just a quick cleanup question for Rob, if I could, just so being my field of data is on the amount of capital that was invested off the balance sheet and 21 and the realizations as well off the balance sheet and 2021 and how that compared to 20.

Yeah activity was certainly up a across across the board, Mike We monetized just over $3 billion off the balance sheet in 2021, and we deployed about $3 7 billion that deployment does not include a global Atlantic. So if you include a global Atlantic and that number would be a little bit below $7 billion.

Speaker 3: Activity was certainly across the board. We monetized just over $3 billion off the balance sheet in 2021, and we deployed about $3.7 billion. That deployment does not include a global Atlantic. So if you include a global Atlantic, and that number would be a little bit below $7 billion of deployment for the year.

Deployment for the year.

Great. Thanks, so much yes. Thanks. Thank you.

Thank you. Our next question comes from the line of Finian O'shea with Wells Fargo Securities. Please proceed with your question.

Speaker 1: Thank you. Our next question comes from mine. As Fannie and O'Shea with Wells Fargo Securities, please proceed with this.

Hi, good morning.

Speaker 5: Hi, good morning. To follow on the insurance topic, are you able to touch on what you're seeing on the regulatory agenda, focusing more on structured product?

Follow on the insurance topic are you able to touch on what you're seeing.

On the regulatory agenda.

Focusing more on structured products and alternative asset manager affiliates and if you see any major impact to the the product that you and your peers are providing to insurance clients.

Speaker 5: and alternatives, FAT Manager affiliates, and if you see any major impacts to the product that you, in your peers, are providing to insurance clients.

Speaker 3: Thanks for the question. It's a topical one and we're spending a lot of time internally focused on it.

Thanks for the question, it's a topical one and we're spending a lot of time internally.

Focused on it.

Speaker 3: You know, part of the answer is similar to the answer Scott just gave from a overall regulatory environment perspective. I'd say the insurance industry, just like other financial services industries, is going through a period of change. In general, the industry is getting more sophisticated and we think that is ultimately a good thing for policy holders.

Part of the answer is similar to the answer Scott just gave from a regulatory and overall regulatory environment perspective, I'd say the insurance industry just like other financial services industries is going through a period of change in general the industry is getting more sophisticated and we think that is ultimately a good thing for policyholders and.

So as a result of that we think it's entirely appropriate for regulators to adapt as the industry evolves and we think smart regulation is a good thing for the industry overall.

Speaker 3: And so as a result of that, we think it's entirely appropriate for regulators to adapt to the industry evolves and we think smart regulation is a good thing for the industry overall. And so as it relates to global Atlantic specifically, we've got really close and transparent relationships with all of our regulators.

And so as it relates to global Atlantic specifically, we've got really close and transparent relationships with all of our regulators.

Speaker 3: We know they are working to gather information and this is just feedback and beyond that, there's really not a lot that we can comment on. All that we can say is that we don't anticipate really any major change to our core business model, which is investing thoughtfully behind the long-term promises that we're making as an institution to policyholders. I appreciate the question and it is a topic one.

We know, they're working together information and industry feedback and beyond that.

There's really not a lot that we can comment on all that we can say is that we don't anticipate really any major change to our core business model, which is investing thoughtfully behind the the long term promises that we're making as an institution to policyholders, but I. Appreciate the question and it is a topic one.

Thank you.

Speaker 1: Thank you. Our final question this morning comes from the line at Rufus Tone with Bank of Montreal. Please proceed with...

Thank you. Our final question. This morning comes from the line of Francis Collins with Bank of Montreal. Please proceed with your question.

Alright, Thanks for taking my question I had one on global Atlantic are clearly strong AUM and earnings growth since the acquisition and I was curious if you anticipate any change in the appetite of block transactions and on your regular quarterly inflows as interest rates start to rise any details that would be helpful. Thanks.

Speaker 10: Alright, thanks for taking my question. Had one on global Atlantic, a clearly strong A.U.A.M. an earnings growth since the acquisition. And I was curious if you anticipate any change in the appetite for block transactions.

Speaker 10: on your regular quarterly inflows as interest rates start to rise. Any details that would be helpful.

Yeah.

Speaker 3: So no change in our appetite. It's been an area of very meaningful, and we think very smart growth that Global Atlantic had over the past 12 months.

So no change in our appetite.

It's been an area of very meaningful and.

And we think very smart growth that global Atlantic has had over the past 12 months.

Speaker 3: You know, I would say the space around block transactions, I'm sure as you noted, it's become a little bit more competitive. But we think with our capital base, quality of our management team, the relationships we have and really are our systems and process.

You know I would say the space around block transactions I'm sure. As you noted has become a little bit more competitive.

But we think.

With our capital base, our quality of our management team and the relationships, we have and and and really our our systems and processes they position us all.

Speaker 3: They position us all to compete really effectively for blog trend action. I think a big reason why Global Atlantic partnered up with KKR in addition to that was our capabilities on the asset management side and our ability to rotate assets in these blogs and to KKR originated product.

To compete really effectively for block transactions I think a big reason why global Atlantic are partnered up with KKR. In addition to that was our capabilities on the asset management side and our ability to rotate assets in these blocks into KKR originated product and so when you combine all of that we think we're really well positioned no change in appetite in the institutional part of Jase business.

Speaker 3: So when you combine all of that, we think we're really well positioned. No change in appetite and the institutional part of GAs business will continue to be a big growth driver for them going forward.

We'll continue to be a big growth driver for them going forward.

Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Larson for any final comments.

Speaker 1: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Larson for any fun.

Speaker 2: We would just really like to thank everybody for your interest in KKR and we look forward to chatting with you next quarter. Take care. Thanks again.

We would just really like to thank everybody for your interest in <unk> and KKR and we look forward to chatting with you next quarter.

Take care thanks again.

Speaker 1: Thank you, this concludes today's conference. You may disconnect your lines at this time. Thank you for your...

Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.