Q2 2025 KKR & Co Inc Earnings Call

Scott Nuttall: Ladies and gentlemen, thank you for standing by. Welcome to KKR's second quarter 2025 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. If anyone should require operator assistance during today's conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now hand the call over to Craig Larson, partner and head of investor relations for KKR. Craig, please go ahead.

Ladies and gentlemen, thank you for standing by. Welcome to kkr's second quarter 2025 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.

If anyone should require operator assistance during today's conference, please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

I will now hand the call over to Craig Larson, partner and head of investor relations for KKR.

Craig Larson: Thank you, operator. Good morning, everyone. Welcome to our second quarter 2025 earnings call. This morning, as usual, I'm joined by Rob Lewin, our chief financial officer, as well as Scott Nuttall, our co-chief executive officer. We would 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.com. And as a reminder, we report our segment numbers on an adjusted share basis. This call will contain forward-looking statements, which do not guarantee future events or performance. So please refer to our earnings release, as well as our SEC filings for cautionary factors about these statements.

Craig, please go ahead.

Thank you, operator. Good morning, everyone. Welcome to our second quarter 2025 earnings call.

this morning as usual, I'm joined by Rob Leon our Chief Financial Officer

As well as Scott Nuttall, our co-chief executive officer.

We would like to remind everyone that we will refer to non-gaap measures on the call which are reconciled to Gap figures in our press release, which is available on the investor Center section at ktr.com.

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

This call will contain forward-looking statements which do not guarantee future events or performance.

Craig Larson: So first, beginning with our results that we've just announced for the second quarter, we're pleased to be reporting fee-related earnings of 98 cents per share, total operating earnings of $1.33 per share, and adjusted net income of $1.18 per share. All of these figures are among the highest we've reported in our history as a public company. Now going into more detail, management fees in the quarter were 996 million. With America's 14 turning on in Q2, alongside of our broader fundraising initiatives and continued deployment, management fees in total are up 18% on a year-over-year basis. Total transaction and monitoring fees were 234 million in the quarter. Capital markets transaction fees were 200, driven by activity with infrastructure and private equity, with just over half of capital markets fees this quarter coming from our activities in Europe. Fee-related performance revenues in the quarter were 54 million.

So please refer to our earnings release as well. As our SEC filings for cautionary, factors about these statements

so first

Beginning with our results that we've just announced for the second quarter.

We're pleased to be reporting fourth quarter related earnings of $0.98 per share.

Total operating earnings of $1.33 per share.

And adjusted net income of 118 per share.

All of these figures are among the highest we've reported in our history as a public company.

Now, going into more detail.

Management fees in the quarter were 996 million.

With America's 14 turning on in Q2, alongside our broader fundraising initiatives and continued employment,

Management, fees and total are up 18% on a year-over-year basis.

Total transaction and monitoring fees were 234 million in the quarter.

Capital markets, transaction fees were 200 driven by activity with infrastructure and private equity.

with just over half of capital, markets fees, this quarter coming from our activities in Europe,

Craig Larson: That figure is up 45% year-over-year, with the growth here driven by the performance allocation from our offshore infrastructure case series vehicle. Fee-related compensation was again right at the midpoint of our guided range, which as a reminder is 17.5%. Other operating expenses for the quarter came in at 172 million. So in total, FRE was 887 million, or the 98 cents per share that I mentioned a moment ago, and our FRE margin came in at 69%. Looking at fee-related earnings more broadly for a moment and the results you've seen over the last 12 months, driven by healthy management fee growth and a strengthening in our capital markets activities, alongside of operating leverage, FRE per share increased 33% for the 12-month period ended June 30, '25, compared to June 30, '24, with a 360 basis point improvement in our FRE margin.

The related performance revenues in the quarter were $54 million.

That figure is up. 45% year-over-year with the growth here, driven by the performance allocation from our offshore infrastructure case, series vehicle.

Be related compensation was again, right at the midpoint of our guided range which has a reminder of 17 and a half percent.

72 million.

so, in total,

F was 887 million.

Where's the 98 cents per share that I mentioned a moment ago?

And our F margin came in at 69%.

Looking at the related earnings more broadly for a moment and the results you've seen over the last 12 months.

Driven by healthy management fee growth.

And a strengthening in our Capital markets activities, alongside of operating Leverage.

Fee per share increased 33% for the 12-month period. End of June 3025 compared to June 3024.

Craig Larson: Now back to the quarter, insurance segment operating earnings came in at 278 million, so modestly ahead of the 250 plus minus level we discussed last quarter, which is where we continue to expect to see insurance operating earnings over the next few quarters. And remember that this line item alone does not capture how our model works in all of our insurance-related economics, recognizing the economics that show up within our asset management segment. So when you include the management fees from the approximately 50 billion of AUM from our Ivy Side, Car & Co-Invest vehicles, capital markets fees also associated with Global Atlantic, as well as the management fees from our investment management agreement with GA, our all-in pre-tax ROE continues to approach that 20% level.

with a 36060 basis point improvement in our, our margin

Now, back to the quarter.

Insurance segment. Operating earnings came in at 278 million. So modestly ahead of the 250 plus minus level. We discussed last quarter.

Which is where we continue to expect to see Insurance, operating earnings over the next few quarters.

And remember that this line item alone does not capture how our model works, and all of our insurance related economics. Recognizing the economics that show up within our asset management segment.

so when you include the management fees from the approximately 50 billion of AUM from our Ivy sidecar and co-invest vehicles,

Capital markets fees also associated with global Atlantic.

Craig Larson: Strategic holdings operating earnings were 29 million, so total operating earnings, which again represents the more recurring components of our earnings streams, were $1.33 per share. And over the last 12 months, nearly 80% of our segment earnings were driven by our more recurring earnings streams, demonstrating in our view the durability that you're seeing across our business model. Turning to investing earnings, realized performance income was 419 million and realized investment income was 154 million. These earnings were driven by a combination of public secondary sales and private transactions, as well as Cape Prime's annual crystallization, alongside with dividends and interest income.

As well as the management fees from our investment management agreement with GA are all in pre-tax, Roe continues to approach. That 20% level,

Strategic Holdings, operating earnings were 29 million.

so total operating earnings which again represents the more recurring components of our earnings streams, where 1.33 cents per share,

And over the last 12 months, nearly 80% of our segments, earnings were driven by our more recurring earning streams demonstrating in our view, the durability that you're seeing across our business model.

Turning to investing earnings.

Realized performance income was 419 million and realized investment income was 154 million.

These earnings were driven by a combination of public, secondary sales and private transactions.

Craig Larson: And finally, turning to investment performance and page 10 of our earnings release, broadly, when you look at the statistics on the page, you're seeing healthy investment performance on behalf of our clients across asset classes during periods of time with uncertainty, alongside our real spikes in volatility. Looking at the statistics themselves, the private equity portfolio was up 5% in the quarter and 13% over the last 12 months. Within real assets, the opportunistic real estate portfolio was up 3% in the quarter and 7% over the LTM. Infrastructure up 3% in the quarter and appreciated 14% over the latest 12 months. In credit, the leveraged credit composite was up 2% in the quarter and up 7% over the last 12 months, with the alternative credit composite up 1% and 9% respectively over those same periods. And with that, I'm pleased to turn the call over to Rob.

As well as K primes, annual crystallization alongside with dividends and interest income.

and finally,

Turning to investment performance and page 10 of our earnings release.

Broadly, when you look at the statistics on the page, you're seeing healthy investment performance on behalf of our clients across asset classes during periods of time with uncertainty alongside a real spikes in volatility.

Looking at the statistics themselves, the private Equity portfolio was up 5% in the quarter and 13% over the last 12 months within real assets.

The opportunistic real estate portfolio was Up 3 in the quarter and 7 or the LTM.

Infrastructure Up, 3 in the quarter and appreciated 14% over the latest 12 months.

In credit.

The Leverage credit composite was up 2 in the quarter and up 7% over the last 12 months.

With the alternative credit composite up 1 and 9 respectively, over those same periods.

Robert Lewin: Thanks a lot, Craig, and thanks to everyone for joining our call this morning. As Craig just walked through, our model continues to deliver consistent results. I'd like to begin by highlighting our deployment and monetization activity, which demonstrates the strength of our global and diversified platform. KKR has been around now for 49 years and has navigated a range of macroeconomic backdrops over those five decades. We understand that volatility and uncertainty create opportunity, and have positioned our firm to ensure that we are maximizing that opportunity on behalf of our clients. We build portfolios for the very long term, and when you invest in companies and assets for 5 to 10-plus year horizons, you need to be thoughtful about the, excuse me, you need to be thoughtful about how the world is going to evolve. And we have found it less important to try and time the market.

And with that, I'm pleased to turn the call over to Rob.

Thanks a lot Craig and thanks to everyone for joining our call this morning.

As Craig, just walked through our model continues to deliver consistent results.

I'd like to begin by highlighting our deployment and monetization activity.

Which demonstrates the strength of our Global and diversified platform.

Take care has been around now for 49 years.

And is navigated a range of macroeconomic backdrops over those 5 decades.

We understand that volatility and uncertainty create opportunity.

And a physician to our firm to ensure that we are maximizing that opportunity on behalf of our clients.

We build portfolios for the very long term.

And when you invest in companies and assets for 5 to 10 plus year horizons,

you need to be thoughtful about the excuse me. You need to be thoughtful about how the world is going to evolve.

Robert Lewin: It is why we are so disciplined in linear deployment and creating outperformance through our approach to value creation at the asset level. Since the start of the year, we've deployed nearly 37 billion of capital, with around half of that deployed in the second quarter. Within private markets, nearly 50% of our year-to-date activity has been outside of the US, and we've been balanced in deploying capital across traditional private equity, growth equity, infrastructure, and real estate. In credit, we've deployed 18 billion of alternative capital since January, diversified largely across direct lending and asset-based finance. ABF, in particular, is an area where we continue to see a lot of growth opportunity, which I'll touch on in a bit more detail in a few minutes. Importantly, there remains a healthy pipeline for deployment in the second half of 2025, and we feel well-positioned with 115 billion of uncalled capital.

And we have found it less important to try and time the market.

This is why we are so disciplined in linear deployment and creating outperformance through our approach to Value creation at the asset level.

Since the start of the year, we've deployed near the 37 billion of capital with around half of that deployed in the second quarter.

Within private markets, nearly 50% of our year. Did activity has been outside of the US.

And we've been balanced in deploying Capital across traditional private equity.

In credit we've deployed 18 billion of alternative Capital since January.

Diversified largely across direct lending and asset based Finance.

ABF in particular is an area where we continue to see a lot of growth opportunity.

Which I'll touch on in a bit more detail in a few minutes.

Importantly, there remains a healthy pipeline for deployment in the second half of 2025.

And we feel well positioned with 150 billion of uncalled capital.

Robert Lewin: As a result of this consistent approach to investing, we also have a mature portfolio that we can monetize opportunistically. Over the last 12 months, realized performance and investment income totaled 2.6 billion. That number is up over 20% from the same period a year ago. Even with that healthy momentum on monetizations, our unrealized carried interest across our global portfolio today stands at a record 9.2 billion. And that number is up roughly 30% from 7.1 billion just 12 months ago. Looking at our private equity portfolio specifically, approximately 60% is marked at over 1 and a half times our cost. And on average, our public names are marked at over five times our cost. So our portfolio is in very good shape, and ultimately, that is the most important indicator of future monetizations.

as a result of this consistent approach to investing,

we also have a mature portfolio that we can monetize opportunistically.

Over the last 12 months, realize performance and investment income, total 2.6 billion.

That number is up over 20% from the same period a year ago.

Even with that healthy momentum on monetization, our unrealized carried interest across our Global portfolio. Today stands at a record, 9.2 billion.

And that number is up, roughly 30% from 7.1 billion just 12 months ago.

Looking at our private Equity portfolio specifically.

Approximately 60%.

Is marked at over 1 and a half times our cost.

And and on average.

Our public names are marked at over 5 times our cost.

So our portfolio is in very good shape.

Robert Lewin: I would say that it is really our global footprint that is a large driver of the continued deployment and monetization activity that we are seeing across the firm. As an example, we've seen robust activity out of Asia recently, where we have nine offices, nearly 600 executives, and manage over 75 billion of assets. Over the past 20 years, we've built a very large, localized business, and we've grown and diversified. Today, traditional private equity comprises less than half of our Asia AUM. That's compared to approximately 90% in 2019.

And ultimately, that is the most important indicator of future monetization.

I would say that it is really our Global footprint.

That is a large driver of the continued deployment and monetization activity that we are seeing across the firm.

As an example.

We've seen robust activity out of Asia recently, where we have 9 offices, nearly 600 Executives and manage over 75 billion of assets.

Over the past 20 years, we've built a very large localized business.

And we've grown in Diversified.

Today traditional private Equity comprises less than half of our Asia AUM.

Robert Lewin: Just to give you a sense of our activity here, we recently signed a definitive agreement to exit an investment in a pharmaceutical company in India, closed on our previously announced exits of a telecom tower company in the Philippines and a grocery store chain in Japan, invested in a leading agricultural infrastructure business in Australia, and a new financial services platform in Singapore, and established a battery energy storage joint venture in Korea. As you can hear, we got a lot going on across Asia and really continue to be at the forefront of activity in the region.

That's compared to approximately 90% in 2019.

Just to give you a sense of our activity here.

We've recently signed a definitive agreement to exit an investment in a pharmaceutical company in India.

Closed on our previously announced exits of a telecom Tower company in the Philippines and a grocery store chain in Japan.

Invested in a leading agricultural infrastructure business in Australia and a new Financial Services platform in Singapore.

And established a battery energy storage joint venture in Korea.

As you can hear, we got a lot going on across Asia and really continue to be at the Forefront of activity in the region.

Robert Lewin: To close out my remarks this morning on monetizations, if you take a look at our pending monetizations as we head into the second half of 2025, so transactions that are signed but not yet closed, we have direct line of sight to north of 800 million of monetization-related revenue, the vast majority of which will be performance income. That's a healthy figure for us and consistent with the overall health of our portfolio. Now turning to the fundraising environment and a few other notable items for the quarter. In Q2, we raised 28 billion of capital and continue to see meaningful progress across asset classes. We held a final close in the second vintage of our asset-based finance drawdown fund and parallel separately managed accounts with a total of 6 and a half billion in commitments. This is more than triple the 2.1 billion predecessor pool of capital.

To close out my remarks this morning on monetization.

if you take a look at our pending monetization as we head into the second half of 2025,

So transactions that are signed, but not yet closed.

We have direct line of sight to north of 800 million of monetization related Revenue.

The vast majority of which will be performance income.

This is a healthy figure for us.

And consistent with the overall health of our portfolio.

Now, turning to the fundraising environment.

And a few other notable items for the quarter.

In Q2, we raised 28 billion of capital.

And continue to see meaningful progress across asset classes.

We held a final close in the second vintage of our asset based Finance, draw down fund and parallel separately, managed accounts with a total of 6.5 billion in commitments.

Robert Lewin: The composition of investors in the fund is encouraging, with approximately 50% of limited partners new to the KKR credit platform, and commitments are roughly evenly split across clients from the US, Europe, and Asia. More broadly, our ABF business continues to see meaningful growth, with AUM increasing over 20% from this time last year to 75 billion. We see ABF as a $6 trillion addressable market today, increasing to over 9 trillion over the next four years. The alternative credit ecosystem overall, including not only ABF but also direct lending and capital solutions, is now larger than the traditional high-yield and leveraged loan markets combined. So ABF is a growing market with secular tailwinds for our industry, and we believe that we are already a leader in the space today. In real assets, we've begun raising capital for our Asia infrastructure strategy.

This is more than triple the $2.1 billion predecessor pool of capital.

The composition of investors in the fund is encouraging.

With approximately 50% of limited partners new to the KKR credit platform.

And commitments are roughly evenly split across clients from the US Europe and Asia.

More broadly.

Our ABF business continues to see, meaningful growth with AUM, increasing over. 20% from this time, last year to 75 billion,

We see ABF as a 6 trillion dollar, addressable market today increasing to over 9 trillion over the next 4 years.

The alternative credit ecosystem overall, including not only ABF but also direct lending and Capital Solutions is now larger than the traditional high yield and leveraged loan Market to combined.

So ABF is a growing Market with secular Tailwinds for our industry.

And we believe that we are already a leader in the space today.

Robert Lewin: And as we think about demand, we feel encouraged by our historical success in this asset class and the differentiated investment returns that we've been able to achieve, as well as the depth of our Pan-Asian presence and breadth of our global connectivity. Turning to wealth, K-Series AUM was 25 billion across private equity infrastructure, real estate, and credit as of June 30th. That figure compares to 11 billion just a year ago. We've been really pleased here to see inflows continue to track at or ahead of our expectations, despite the market volatility that we've experienced year to date. As you know, in April, we launched two public-private solutions through our strategic partnership with Capital Group, making the KKR platform available to an even broader universe of clients.

For our Asia infrastructure strategy.

And as we think about demand, we feel encouraged by our historical success in this asset class.

And the differentiated investment returns that we've been able to achieve

As well as the depth of our Pan Asian presence and breadth of our Global connectivity.

Turning to wealth.

K series AUM was 25 billion across, private Equity infrastructure, real estate and credit as of June 30th.

That figure compares to 11 billion just a year ago.

We've been really pleased here to see inflows continue to track at or ahead of our expectations, despite the market volatility that we've experienced year to date.

As you know, in April, we launched 2 public private Solutions, through our strategic partnership with capital group.

Robert Lewin: Our continued momentum is earmarked most recently with the filing of a registration statement with the SEC for a public-private equity product, which on the private side will be investing in a K-Series private equity vehicle, as well as PE Co-Invest opportunities. And looking ahead, we continue to work on a real asset product. We feel great about our partnership with Capital Group and believe that there is more to do together as partners. Next, I'd like to give a brief update on our insurance business. First, with a focus on elongating and further diversifying our liabilities. Over the last four months, we've successfully issued approximately 2 and a half billion of funding agreements, with a weighted average duration of eight years through separate transactions in the US, Europe, Japan, and Canada. We believe the local currency liability funding will also help support asset origination outside of the US.

Making the KKR platform available to an even broader universe of clients.

Our continued momentum is earmarked most recently with the filing of a registration statement with the SEC for a public private Equity product.

Which on the private side will be investing in a case series private Equity vehicle, as well as PE co-invest opportunities.

And looking ahead, we continue to work on a real asset product.

We feel great about our partnership with capital group and believe that there is more to do together as partners.

Next, I'd like to give a brief update on our insurance business.

First with a focus on elongating and further diversifying our liabilities.

Over the last four months, we successfully issued approximately $2.5 billion of funding agreements.

With a weighted average duration of 8 years through separate transactions in the US Europe, Japan and Canada.

Robert Lewin: And you should expect us to continue to be active here with a real focus on the longer duration parts of the FABN market. Alongside of this, we continue to make very good progress on the addition of alternatives to the portfolio, where we believe that we have a differentiated sourcing advantage as a firm. We expect these changes will ultimately drive up overall returns, while at the same time naturally reducing our leverage profile. And second, an update on third-party capital, which is a critical component of our strategy at Global Atlantic. Earlier this week, Japan Post Insurance announced that it would invest 2 billion through a new vehicle managed by Global Atlantic, expanding our existing strategic partnership. As we have talked about since our initial purchase of Global Atlantic, our ability to marry third-party capital alongside the GA balance sheet is a real differentiator for us.

We believe that local currency liability funding will also help support asset origination outside of the U.S.

And you should expect us to continue to be active here with a real focus on the longer duration, parts of the Fab and Market.

Alongside of this, we continue to make very good progress. On the addition of alternatives to the portfolio, where we believe that we have a differentiated sourcing Advantage as a firm.

We expect these changes will ultimately drive up overall returns while at the same time, naturally reducing our leverage profile.

And second an update on third-party Capital, which is a critical component of our strategy at Global Atlantic.

earlier this week, Japan post Insurance announced that it would invest 2 billion through a new vehicle managed by global Atlantic expanding, our existing strategic partnership,

As we have talked about since our initial purchase of global Atlantic.

Our ability to marry third party capital.

Robert Lewin: Our Ivy Sidecar vehicles, which pay fee and carry similar to a drawdown credit or PE fund, allow us to grow GA in a very capital-efficient way. More specific to the Japan Post commitment, this is another milestone in that effort. And when you aggregate the JPI commitment and where we stand on our Ivy strategy capital raise, we currently have approximately 6 billion of third-party capital capacity versus Ivy 2, which was at 2.7 billion. Once this new capital is put to work, we expect it will translate to over 60 billion of additional fee-paying AUM. So we are seeing significant momentum in an important part of our strategy and are pleased by the receptivity of our client base to insurance as a new and compelling asset class. The last item I wanted to touch on is more of a strategic update.

Alongside the ga balance sheet is a real differentiator for us.

Our IV sidecar Vehicles which pay fee and carry similar to a draw down credit or PE fund. Allow us to grow G in a very Capital efficient way.

More specific to the Jan Japan post commitment.

This is another milestone in that effort.

And when you aggregate the JPI commitment and where we stand on our Ivy strategy, Capital raise, we currently have approximately 6 billion of third-party Capital capacity versus ib2, which is at 2.7 billion.

Once this new capital is put to work, we expect it will translate to over 60 billion of additional fee paying AUM.

So, we are seeing significant momentum in an important part of our strategy.

And are pleased by the receptivity of our client base to insurance as a new and compelling asset class.

Robert Lewin: Yesterday, we announced an expansion of our life sciences footprint through the acquisition of a majority stake in Healthcare Royalty Partners, or HCR, a leader in biopharma royalty investing. The company's total AUM of approximately 3 billion is largely perpetual in nature. As part of this transaction, HCR's approximately 30 employees will continue to focus on royalties and credit investing opportunities and will collaborate closely with KKR's existing teams. HCR builds on KKR's long-standing experience in healthcare investing across traditional private equity and middle market funds, our dedicated healthcare strategic growth strategy, as well as our existing strategic investment in Katalyo Capital. This acquisition is also very consistent with our framework for evaluating strategic asset manager M&A.

The last item I wanted to touch on is more of a strategic update.

Yesterday we announced an expansion of our life sciences footprint through the acquisition of a majority stake in healthcare, royalty Partners or HCR.

A leader in biofarma royalty, investor.

The company's total AUM of approximately 3 billion is largely Perpetual in nature.

As part of this transaction hdr's, approximately 30 employees will continue to focus on royalties and credit investing opportunities. And we'll collaborate closely with kkr's existing teams.

HCR Builds on kkr's Long. Long-standing experience in healthcare investing across traditional private equity and Middle Market funds. Are dedicated Healthcare strategic growth strategy as well as our existing Strategic investment in catalio capital.

Robert Lewin: HCR brings us long-duration, unique, and largely perpetual capital, access to large addressable markets where HCR is already a top three player, and importantly, we believe that HCR will bring additional origination capacity to our overall platform, primarily across Global Atlantic and our credit pools of capital. Thank you all for joining our call this morning. Our team remains very excited around the business momentum that we are seeing across the firm and importantly how that will translate into further P&L outcomes. And to be clear, given all of this momentum, we continue to feel confident in our ability to achieve the 2026 guidance that we shared last year across both our fundraising and our core financial metrics, which include FRE per share, TOE per share, and of course, ANI per share. And now, before we move on to questions, I'd like to briefly hand it off to Scott.

Asset manager m&a.

HDR, brings us long duration, unique and largely Perpetual capital.

Access to large addressable markets, where HCR is already a top 3 player.

And importantly, we believe that HCR will bring additional origination capacity to our overall platform.

Primarily across Global Atlantic and our credit pools of capital.

Thank you all for joining our call this morning.

Our team remains very excited around the business momentum that we are seeing across the firm and importantly how that will translate into further pnl outcomes.

And to be clear.

Given all of this momentum, we continue to feel confident in our ability to achieve the 2026 guidance, that we shared last year.

Across both our fundraising and our core Financial metrics.

Which include FR per share toe per share, and of course a&i for share.

And now before we move on to questions, I'd like to briefly hand it off to Scott.

Craig Larson: Thank you, Rob. Before we start today, we want to acknowledge the tragic events of earlier this week. We all have a lot of friends at Blackstone, and a number of people here were friends with Wesley. Our hearts and thoughts are with all of the victims and their families. We mourn with them. Operator, let's please open the line.

Uh, thank you Rob.

Uh, before we start today.

We want to acknowledge the tragic events of earlier this week.

We all have a lot of friends at Blackstone.

And a number of people here were friends with Wesley.

Our hearts and thoughts are with all of the victims and their families.

We mourn with them.

Operator.

Let's please open the line.

Operator: Thank you. We will now be conducting a question and answer session. We ask that all callers limit themselves to one question. If you have additional questions, you may re-queue, and those questions will be addressed time permitting. If you would 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 would 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. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Craig Siegenthaler with Bank of America. Please proceed with your question.

Thank you.

We will now be conducting a question-and-answer session.

We ask that all callers limit themselves to 1 question.

If you have additional questions, you may request them, and those questions will be addressed, time permitting.

if you would like to ask a question, please press star 1 on your telephone keypad,

A confirmation Tom will indicate your line is in the question queue.

You may press star 2 if you would like to remove your question from the queue.

Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

1 moment, please while we pull for questions.

Analyst: Good morning, Scott, Rob. Hope everyone's doing well, and thanks for taking my question. You called out K-Series credit in the release, and we wanted to circle back on K-Fit. You know, this was previously somewhat of a gap for KKR and wealth, but it's been progressing as of late. So I was hoping you could update us on the fundraising front, progress on platform additions, and how this product is differentiating itself versus an increasingly crowded field of players in private wealth.

Thank you. Our first question comes from line of Craig. Sean Feller with Bank of America. Please receive with your question.

Good morning. Scott Raab, hope everyone's doing well and thanks for taking my question. You, you called out K series Credit in the release and we wanted to Circle back on K fit, you know, this was previously somewhat of a gap for K care and wealth, but it's been progressing as of late. So I was hoping you could update us on the fundraising front uh, progress on platform additions and and how this product is differentiating itself versus an increasingly crowded field of players in private. Well,

Craig Larson: Hey, Craig. It's Craig. Why don't I start on that? And just to take a step back for a moment on K-Series more broadly before diving into credit, just to level set for everyone, as of June 30, we had approximately 120 billion of assets under management from individuals, and that number does not include policyholders at Global Atlantic. So if anything, again, that figure is understated as you think of the breadth that we have and the presence that we have with individuals. And in terms of K-Series, Rob gave some of these stats, obviously. A year ago, we were at 11 billion of AUM, and as we look at where we are today, we're at 25 billion, so early days, but we are really encouraged about the progress that we have.

Uh hey Craig. It's Craig why don't I start on that? And just to uh to take a step back for a moment on case, series more broadly before diving in the credit, just a level set for everyone. Um, as of June 30th, we had approximately 120 billion of assets. Under management from individuals,

And that number does not include policy holders at Global Atlantic. So if anything again that figures understated, as you think of the breadth that we have in the presence that we have uh with individuals and in terms of case series Rod gave some of these stats obviously uh a year ago we were at 11 billion of AUM and as we look at where we are today, we're at 25 billion so early days but we are really encouraged about the progress.

Craig Larson: I think that is particularly true in infra and private equity, which are newer asset classes for more mass-affluent investors. And in terms of credit, if you look at the decisions and how we're situated, we did make the active decision to launch PE and infra ahead of our private BDC. And I think we did want to be earlier to market in these newer asset classes. And when you look at market share across new capital raised, across all of these different strategies, we rank second on a year-to-date basis. So I think we feel very good about our progress. In terms of K-Fit specifically, we do have a specific allocation to asset-based finance as we think about how to position and how to differentiate K-Fit relative to, as you noted, a space where you have a lot of competition. And it's early days.

That we have. Uh, I think that is particularly true in infra and private equity, which are newer asset classes for more mass affluent investors. Um, and in terms of credit, uh, if if you look at the decisions that uh in and how we're situated, we did make the active decision to launch PE and infra ahead of our private BDC

And I think we did want to be earlier to Market in these newer asset classes. And when you look at market share across New Capital Race Across all of these different strategies, we ranked second on a year to date basis. So I think we we feel very good about our progress.

Craig Larson: We are continuing to see progress from here as it relates to distribution partners. We did raise more capital on K-Fit in Q2 than we have in its history. So we are seeing progress, albeit off a lower base, and where we see lots of continued opportunities for runway for us. And then just to be clear, we also are converting what is called K-COP, which was a multi-sector credit vehicle, to a primarily asset-based finance-focused vehicle, which we're calling K-ABF. And so I think as we look at this opportunity in asset-based finance, it feels to us like there is real demand for a dedicated evergreen ABF product that's tailored to individuals. And it felt to us like converting K-COP was the best way for us to develop this solution efficiently. This is contingent, to be clear, on a proxy that we have with K-COP shareholders.

Here, as it relates to distribution Partners. We did raise more capital on case it uh, in Q2 than we have in its history. So we are seeing progress. Uh, albeit off the lower base and where we see lots of continued opportunities for runway for us.

And then just to be clear. Uh, we also are converting, uh, what is called kop, which was a multi sector credit vehicle to a primarily acid-based Finance, focused vehicle, which we're calling kabf.

Craig Larson: We do anticipate that conversion to take effect on or around the end of August. So I think at the heart, lots of progress. It does feel like there's a lot more for us to do on this front, most specifically. And then just to be clear, everything that we've launched with Capital Group is incremental to all of this.

And so I think as we look at this opportunity and asset base Finance, it feels to us like there is real demand for a dedicated Evergreen ABF product that's tailored to individuals and it fell to us like converting kop was the best way for us to develop this this solution efficiently. Uh, this is contingent to be clear on a a proxy that we have with kop shareholders. Uh, we do anticipate that conversion to take effect on or around, uh, the end of August

Scott Nuttall: And Craig and Scott, I think that's well said. You know, the main difference I think we're hearing in the market is this allocation to asset-based finance as part of K-Fit. I think that's helping. We're getting added to more platforms every quarter. So I appreciate you pointing out the momentum that we're starting to see there. We'll keep you posted on K-ABF that Craig just referenced. We're optimistic about that. And as you know, it's early days with Capital in terms of what we've done there. And as a reminder, that public-private solution that we've launched with our partner has a 40% allocation to what we do, about 20 of those points to direct lending, 20 to asset-based finance. So we have another avenue to the wealth channel through our partnership with Capital. So we'll keep you posted, but I appreciate you highlighting it.

So I think at the heart lots of progress, um, it does feel like there's a lot more for us to do on this front and most specifically, and then just to be clear, everything that we've launched with capital group is incremental, uh, to all of us.

Hey Craig, it's Scott. Um, I think that's well said. Uh, you know, the main difference. I think we're hearing in the market is this allocation to asset based Finance as part of K fit, I think that's helping we're getting added to more platforms every quarter.

So appreciate you pointing out the the momentum that we're starting to see there. Um we'll keep you posted on kabf that Craig just referenced. We're optimistic about that and as you know it's early days with capital um in terms of what we've done there and as a reminder that public private solutions that we've launched with our partner,

Craig Larson: And you know, Craig, there's just one other thought here. I'd be remiss if I didn't mention, if you do look at K-Fit returns, whether that's on a year-to-date basis or on an inception-to-date basis, they're as good as it gets in the industry in terms of private BDCs. So I think if we continue to perform from an investment standpoint, that again will bode exceptionally well in terms of where we think we can end up in terms ultimately in the size of the vehicle.

Has a 40% allocation to what we do about 20 of those points to direct lending 20 to asset based Finance. So we we have another Avenue to the wealth Channel Through uh, through our partnership with uh, with capital. So, we'll keep you posted, but appreciate you highlighting it.

And you know Craig there's just 1 other thought. Here, I'd be remiss if I didn't mention. If you do look at case fit returns whether that's on a year to date basis or on an Inception to date basis. Uh,

There's good as it gets in the industry in terms of private pdc's. So I think if if we continue to perform from an investment standpoint uh that again will vote exceptionally well in terms of uh where we think we can end up in terms of ultimately in the size of the vehicle.

Operator: Our next question comes from the line of Alex Blossstein with Goldman Sachs. Please proceed with your question.

Analyst: Hey, good morning. Thank you guys for taking the question. I wanted to zone in a little bit on the institutional dynamic. The environment, of course, has changed drastically relative to prior quarter's call. I know we've talked in the past more about more of a, I guess, a barbelled approach to institutional fundraising. But given a better outlook for monetization activity, obviously a much healthier equity market as well, is that still the case? How are you sort of gauging the pulse of institutional clients as you go through this fundraising cycle?

Our next question comes from the line of Alex blasting with Goldman Sachs. Please receive with your question.

Scott Nuttall: Thanks for the question, Alex. Scott, I would say, as you can tell from our numbers, I mean, we've been really busy on the fundraising front, 109 billion in the last 12 months. If you look at the last couple of years, 217 billion. So, you know, pretty consistent momentum throughout. So we read the same headlines you do. But as we look at kind of what's happening here in the firm, we remain very, very active. I'd say investors are kind of back to or getting back to business as usual. So we're having highly constructive discussions on multiple fronts and around the world. And I think the punchline that probably matters for most of the people listening is last April, we had shared a target for fundraising for 2024 through 2026 at over 300 billion.

Good morning. Thank you guys for taking the question. Um, I wanted to, um, Zone in a little bit, on the institutional Dynamic. Um, the environment, of course, has changed drastically, uh, relative to Prior, uh, quarters call. Um, I know we've talked, um, in the past more about more of a, I guess a barbell approach, uh, to institutional fundraising, uh, but given a better outlook for monetization activity. Obviously much healthier Equity markets as well. Um, is that still the case? How are you sort of gauging the pulse of institutional clients as you go through this fundraising cycle?

Uh thanks for the question, Alex Scott. I I would say um as you can tell from our numbers, I mean we've been really busy on the fundraising front. Um, 109 billion the last

Uh, 12 months.

If you look at the last couple of years, $217 billion. So, you know, there’s been pretty consistent momentum throughout. We read the same headlines you do.

But as we look at kind of what's Happening Here in The Firm, we remain very, very active.

I'd say, um, investors are kind of back to or getting back to business as usual.

So, we are having highly constructive discussions on multiple fronts and around the world.

And I think the punchline that probably matters.

Scott Nuttall: We're halfway through those 36 months, and we're ahead of pace and feel really good about the target we shared with you, including the plus behind the 300 billion. So I would say the institutional investors we're talking to, it's a little bit of a different story depending on where you are and what you're talking about. But I'd say infrastructure people still trying to catch up to their allocations, same thing with private credit, with increasing interest in asset-based finance. Rob mentioned this development of insurance as an asset class that we think has an attractive opportunity on the forward. And I think most of the noise has been around private equity and how those with mature programs on the institutional front are thinking and acting.

Uh, for most of the people listening is last April, we had shared a target for fundraising for 2024 through 2026 at over 300 billion.

We're uh, halfway through those 36 months and we're ahead of pace and feel really good about the target we shared with you, including the plus behind the 300 billion.

So, I would say the institutional investors we're talking to.

It's a little bit of a different story depending on where you are and what you're talking about.

But I'd say um infrastructure people still trying to catch up to their allocation same thing with private credit with increasing interest in asset based Finance. Rob mentioned this development of insurance as an asset class that we think has has attractive opportunity on the forward and I think most of the noise has been around uh private equity.

Scott Nuttall: But given the fact that we have sent back so much cash relative to that, which we've called, and as a reminder, over the last eight years approaching two to one dollars back to dollars called, we are finding that to be a very productive set of discussions and very much business as usual for us. The other thing I'd call out is, we've referenced this before, but I think it's actually accelerating as a theme. We are finding institutions consolidating their relationships. They want to do more with fewer partners. So we're having more strategic partnership dialogues, more multi-product dialogues, and that plays to our strengths, as you know. Then you add on private wealth and Capital Group and GA. It just feels really good right now.

um but given the fact that we have sent back so much cash relative to that which we've called and as a reminder, over the last

8 years approaching 2 to 1 uh, dollars back to Dollars called.

Um, we are finding uh that to be a very productive set of discussions and very much business as usual for us.

The other thing I'd call out is we've referenced this before, but I think it's actually accelerating as a theme. We are finding institutions consolidating their relationships.

They want to do more with fewer Partners, so we're having more strategic partnership dialogues.

More multi-product dialogues.

And that plays to our strengths, as you know. Then you add on private wealth and Capital Group NGA. It just feels really good right now.

Operator: Our next question comes from a line of Steven Truwell with Wolfe Research. Stacey, take your question.

Our next question comes from the line of Steven Churro with Wolf Research. Please repeat your question.

Analyst: Hi, good morning.

Scott Nuttall: Morning.

Analyst: And I appreciate you guys taking my questions. So I did want to circle back. ABF deployment opportunity, the strong fundraise in ABF vehicles juxtaposed with the announcement of the Harley-Davidson deal, where I know you took a stake in the financing unit, purchased a significant portion of the loan portfolio, was hoping to whether you could speak to opportunities to consummate similar transactions with other retail participants. We're just trying to gauge whether there's more of a one-off or where other retail firms might be open to exploring similar transactions, just given the positive reaction to HOG shares following the announcement.

Hi, good morning.

Morning and appreciate you guys taking my questions so um, I did want to Circle back uh ABF deployment opportunity. Um the strong fund raise um and maybe that vehicle is juxtaposed with the announcement of the Harley-Davidson deal, right? I know you took a stake in the financing unit purchased a significant portion of the loan portfolio.

Was hoping to whether you could speak to opportunities to consummate similar transactions, with other retail. Participants, I'm just trying to gauge whether there's more of a 1-off or where other retail firms might be open to exploring similar transactions. Just given the positive reaction to hog, shares following the announcement.

Craig Larson: Yeah, Steven, thanks for the question. Why don't I start broadly on ABF, and then we can talk about Harley-Davidson? So just to level set again, on page 13 of our release, we detail in our credit and liquid strategies business the composition of our 290-somewhat billion of AUM. And within private credit, you've seen that grow at a very healthy rate. We're up 20% year over year, 120 billion of AUM. 75 of that is asset-based finance. That year-over-year growth is in the mid-20s. So I think with 75 billion of ABF AUM growing at a north of 20% year-over-year rate, you get a sense of the significance of this business and the growth trajectory that you've seen. And Rob had mentioned in our prepared remarks just how we feel we're really well positioned strategically looking forward from here.

Yeah, Stephen thanks for the question. What, why don't? I start broadly on ABF and then we can talk about Harley-Davidson. Um,

Craig Larson: And look, in this environment, back to your more specific question on Harley-Davidson in the outlook, look, we think this should be a wonderful environment for asset-based finance. And this is one of the things that Henry McVey and our macro team have actually written about as opportunities for us. And as we think about this overall environment, our companies that want to see or are electing to go in a more capital-like fashion, and if there's a way for them to free up capital and use that capital for other strategic initiatives. And I think at the heart, that's what you saw in the Harley-Davidson deal. So again, they sold a majority of their motorcycle loan portfolio, and then there's also a long-term flow partnership to sell new motorcycle loan originations.

So just to level set again on page 13 of our release. We detail uh in our credit liquid strategies business, the the composition of our 290 some odd billion of AUM. And within uh, private credit, you you've seen that grow at a very healthy rate, we're up 20% year-over-year, 120 billion of AUM. 75 of that is is asset based finance that that year-over-year growth is in the mid 20s. So I think with 75 billion of of ABF AUM growing at a at a north of 20% year-over-year rate, you get a sense of the significance of this business and the growth trajectory that we've uh, that you've seen and Rob had mentioned in our prepared remarks, just how we feel. We're really well positioned uh strategically looking forward from here and look in this environment back to your more specific question on Harley-Davidson in the outlook look we think this should be a wonderful environment for asset based finance. And this is 1 of the things that Henry McVey

Craig Larson: Look, I think as we look at Harley-Davidson, it's a company, obviously, with a truly iconic brand, a really passionate, loyal customer base. But it is another example of this broader trend. And you've seen this in a number of instances for us, whether this is Discover, PayPal, BMO Financial Group, GreenSky Home Loan Improvements. Again, you've just seen a handful of these instances of companies electing to go capital-light, to free up capital, to pursue other strategic objectives. And it was great from our standpoint to see the reaction in their stock. I think it was up 12 or 13%. So it certainly seemed to be very well received by Harley-Davidson shareholders. Again, they reacted very positively to the news.

And our macro team have actually written about um, as opportunities for us. And as we think about this overall environment, our companies that that want to see, uh, or or are electing to go into more Capital like fashion. And if there's a way for them to free up capital and use that capital for other strategic initiatives, and I think at the heart, that's what you saw in the Harley-Davidson, uh, deal. So again, uh, they sold the majority of their motorcycle loan portfolio. And then there's also a long-term flow partnership to sell new motorcycle loan, originations

look, I think as we look at Harley-Davidson, it's a company Odyssey, with a truly iconic. Brand a really passionate, um, loyal customer base. But it, it is, uh, another example of this broader Trend and you've seen this in a number of instances for us, whether this is, uh, discover uh, PayPal BMO Financial Group, uh, green Sky, home loan improvements. Again, you've just seen a handful of these instances of companies. Electing to go Capital, light to free up Capital to pursue other strategic objectives and it was great from our standpoint to see the reaction, uh, in their stock. I think it was up to 12 or 13%, so it's certainly, uh, seem to be very well received by Harley-Davidson shareholders. Um, again, they reacted, very positively to the news

Operator: Our next question comes from a line of Glenn Shore with Evercore. Please proceed with your question.

Our next question comes from a line of Glenn Shore with evercore. Please receive with your question.

Analyst: Hi, thanks very much. You know, Scott, I think it was after the quarter you announced just the other day the first investment with Energy Capital Partners relationship, that big 50 billion announcement. And so my question is, I get the huge benefit of having dedicated 24/7 power in your building. The question I have is, do you have those types of relationships pre-leased and pre-spoken for? Are we, if we build it, they will come and there's so much demand that we're going to start leasing it? I'm just curious on how you put that money to work and what year the cash flows start beginning. Just curious on how that ramps because the TAMs are so big. I'm looking to get a little perspective.

Hi. Thanks very much.

Um,

You, I think it was after the quarter, you announced just the other day. Um, the the first investment with energy Capital Partners relationship, that big 50 billion announcement. And so my question is, I I get the huge benefit of having dedicated 24/7 power.

Uh, and you're building the... The question I have is, do you have those?

Craig Larson: Yeah, it's Craig. Why don't I start? So just to be clear, we are not speculative builders. So the answer to the question you asked, the project's already been leased to, in our view, a very attractive counterparty. And I think the other broad point, as you note, look, there is just a massive need for capital. And in many ways, the opportunity is broader than just data centers. So there's going to be a need for data centers, certainly, but at the same time, you need massive investment in fiber, massive investment in mobile infrastructure at the same time to support the growth in data creation and consumption. And so for us, when we look at our digital infrastructure presence and you add what we've done in those three pieces together, in total, there's over 40 billion, 40 of equity invested across these areas.

Um and and what year, the cash flows start beginning, just curious on how that ramps because the, the, the Tams are so big. I'm I'm I'm, uh, looking to get a little bit. It's Craig, why don't why don't I start? So, just to be clear, we are not speculative. Builders

so that the answer to the question you asked the projects already been leased,

Uh, to an RV, a very attractive counterparty. And I think the other broad Point as, as you know, look, there is just a massive need.

For Capital and in many ways, the opportunities broader than just data centers. So there's going to be need for data center certainly, but at the same time you need massive investment in fiber. Massive investment in Mobile infrastructure, at the same time to support the growth in data creation and consumption.

Craig Larson: Now, to be clear, that does include co-investment and co-underwriting, but it certainly gives you a very good sense of how active we've been in this area. And I think one of the things that plays to our strengths here is the connectivity and the culture you have across the firm. So again, we're able to invest in these themes across a whole bunch of different pools with different risk return, different geographic exposures, et cetera. And so if you look at just the data center piece in that, we have exposure across global infra, Asia infra, real estate, core private equity, our wealth strategies in addition to Global Atlantic. So it is a huge mega theme. I think you're going to hear more from us over time related to this. And again, thanks for the question. We do look at last night's announcement.

And so for us, when we look at our digital infrastructure presence and you add what we've done in those 3 pieces together, uh, in total, there's over 40 billion, 40 of equity, investor these areas. Now to be clear, uh, that doesn't include co-investment and co- underwrite, but it gives you a very good sense of how active we've been, uh, in this area. And I think 1 of the things that plays to our strengths. Here is the connectivity and the culture you have across the firm. So again, we're able to invest in these themes across a whole bunch of different pools with different risk, return different, Geographic exposures, Etc.

Craig Larson: It's just a really interesting, really interesting direction of travel as it relates to the intersection of both as it relates to infrastructure as well as energy infrastructure and the need to link power as a solution.

Scott Nuttall: And Glenn, it's got to your question on timing. So construction is already underway. Expected completion date, fourth quarter next year, to give you a sense of when you start to turn on and the lead times.

And so, if you look at just the data center piece, in that, uh, we have exposure across Global in for Asia, in for a real estate core private Equity are well strategies. In addition to Global Atlantic. So it is a huge magazine. I think you're going to hear more from us over time uh related to this and again thanks for the question we do look at last night's announcement. It's just a really interesting uh really interesting direction of travel as it relates to the intersection of um both Ezra infrastructure uh as well as energy infrastructure and the need to link power is a solution.

And Glenn. It's got to your question on timing. Uh, so construction is already underway.

Expected completion, date fourth quarter, uh, next year.

To give you a sense of when um, you start to turn on and the lead times.

Operator: Our next question comes from a line of Ben Boedisch with Barclays. Please do with your question.

Analyst: Hi, good morning, and thank you for taking my question. Helpful updates on Global Atlantic and the prepared remarks. I was wondering if you could unpack a little bit more of just the performance in the quarter itself. You know, what specifically changed that led to the outperformance versus your prior guide of kind of around 250 for the next couple of quarters? And then as we think longer term, how important is the sort of elongation of the liability profile? How dependent is that on the FABN market or sort of pivoting the liability profile of your retail flows? Does one matter more than the other, and how long may that take to kind of get to where you want it to be? Thank you.

Our next question comes from the line of Ben Buddhist with barklay. Please should be with your question.

Hi, uh, good morning. And thank you for taking my question. Um, helpful updates on global Atlantic and the prepared remarks. I was wondering if you could unpack a little bit more of just the re the, the performance and the quarter itself, you know what specifically changed, uh, that led to the outperformance versus your, you know, prior guide of kind of around 250, uh, for the next couple of quarters. Um, and then as we think longer term, how important is the sort of elongation of the liability profile, how, how dependent is that on the Fabian Market or sort of pivoting, the liability profile uh, of your, you know. Retail flows does does 1 matter more than the other um and and how long may that take uh to kind of get to where you want it to be.

Scott Nuttall: Thanks a lot, Ben, for the question. It was definitely a solid quarter for Global Atlantic in Q2, 278 of operating earnings. To be clear, there was some variable investment income that drove that number. And so as we've previously provided a guide of plus or minus 250 million of operating earnings, our expectation for the foreseeable future is that is still the right number to model going forward. As it relates to the evolution of the business, I think there's really three things going on simultaneously. Number one, third-party capital is a big advantage for us. And we talked about where we stand today relative to where we were when we had IB2, which we're still investing as a strategy. We're north of double the amount of capital, and that's a really important strategic imperative. So a lot of good momentum there.

Thank you.

Thanks a lot been for the for the question. It was definitely a solid quarter for Global Atlantic in Q2, 278 of operating earnings be clear. There was some variable investment income that drove that number. And so as we've previously provided a guide of plus or minus 250 million of operating earnings, you know, our expectation for the foreseeable future is that is still uh, the right number to, to model going forward, as it relates to the evolution of the business. I think there's really, you know, 3 things going on, you know, simultaneously, uh, number 1, um, third party capital is a big Advantage for us. And we talked about, you know, where we stand today relative to, to, where we were, uh, when we had iv2, which were still investing,

Scott Nuttall: In terms of the liabilities and wanting to elongate those liabilities, it's definitely not just the FABN channel, but that's a component. We're seeing that more in the individual channel as well. We continue to have an active pipeline on the block side, which is longer duration liabilities too. And so there's a number of different ways that we can effectuate longer duration liabilities, but I think that's going to be ultimately a multi-year process. And alongside that, as we are elongating our liabilities, we're going to methodically take up our allocation to alternatives, and we're making good progress there too. We're still only about 1% allocated to alternatives at Global Atlantic. Industry average is closer to 5%. And so we've got some work there to go, but you know we're not in a rush.

Strategy, where north of double the amount of capital and that's a really important strategic imperative. So a lot of good momentum there in terms of the liabilities and wanting to elongate those liabilities. It's definitely not just the Fab and channel, but that's a component. Uh, we're seeing that more in the individual Channel as well. Uh, we continue, uh, to have an active Pipeline on the Block side, which is longer duration, liabilities to. And so there's a number of different ways that we can, uh, effectuate longer duration liabilities. But I think that's going to be ultimately a, a multi-year process. And alongside that as we are elongating our liabilities, we're going to methodically take up our allocation to Alternatives. And we're making good progress there too. We're still only but 1% allocated to Alternatives uh at Global Atlantic industry. Average is

Scott Nuttall: We're going to make sure we do this in the right way and to ensure that when all elements of those business models come together, it'll really set us in a very differentiated way from the industry. And I think to be really beneficial to our shareholders over the long term. So we're excited with the progress, but still relatively early days.

Closer to 5%. And so we've got some work, uh, their uh, to go. But, um, you know, we're we're not in a rush, we're going to make sure we do this in the right way. Um, and to ensure uh, that when all elements of those business model come together, uh, it'll really, uh, set us in a, in a very differentiated way from the industry uh and I think to be really beneficial uh to our shareholders, over the long term. So we're excited with the progress but still relatively early days.

Operator: Our next question comes from a line of John Barnish with Piper Sandler. Please proceed with your question.

Comes from the line of John Barnes with Piper Sandler. Please receive with your question.

Analyst: Good morning, and thank you for the opportunity. Can you talk about the opportunity presented for the company from potential 401(k) retirement reform and how meaningful this could be? Thank you.

Scott Nuttall: Craig, you want to start?

Good morning and thank you for the opportunity. Can you talk about the opportunity? Presented for the company from potential 401K, retirement reform and how meaningful this could be. Thank you.

Craig Larson: Sure. So John, a couple of thoughts just to begin. Look, at the heart, we are encouraged to hear the policymakers are discussing ways to help make private market investments more available to US retirement plans. And I think as we hear this, I think we have two overarching thoughts that I think the first, and this is a phrase that our public affairs team uses internally, that we think in many ways this is about giving similarly situated people similar options. And what we mean by that is that right now across many states in the US, if you're a teacher, probably 30% or so of your retirement is provided through alternative investments. That percentage, though, for a dentist is going to be closer to zero.

Craig, you must start sure.

You are encouraged to hear that policymakers are discussing ways to help make private market investments more available to us, including retirement plans.

and I think as we hear this, I think we, we have 2 overarching thoughts that I think the first

And this is a phrase that our public affairs team uses internally that we think in many ways, this is about giving similarly situated people.

Similar options.

And what we mean by that is that right now across many states in the US, if you're a teacher probably 30% or so of your retirement is provided through alternative Investments.

Craig Larson: And so in many ways, this is about giving people an option to increase, to allocate a portion of their savings to higher performing asset classes, no different than what we've seen from institutions over the last many number of decades. And I think the second part of this is that we think at the heart, fiduciaries should be able to act as fiduciaries and increase the investment options that are available to fiduciaries to consider on behalf of their clients. So back to your question in terms of what this means for us. Look, we think there's a real opportunity here. That's true for individual investors. That's also true for firms like ours. It's a massive market. I think these statistics are broadly well known. But in the US, retirement is a 40 trillion market, with defined contribution being 12 billion, or if not even north of that.

That percentage though, for a dentist is going to be closer to zero.

And so, in many ways, this is about giving people an option to increase to allocate a portion of their savings to higher performing asset classes.

No different than what we've seen from institutions.

Over the last. Many number of decades.

And I think the second part of this is that we think at the heart fiduciary should be able to act as fiduciaries and increase the investment options that are available to fiduciaries.

Craig Larson: It does make a lot of sense to us that target date funds, which have been taking 60% plus of share of 401(k) flows, if you will, is where you'll probably see alternatives first. So again, if you think of someone who's early in their retirement planning, it just makes sense to us that someone who's early in that glide path with that really long-term vision is where all else can be most relevant. And so I think as we think about this opportunity, we do look at it as a very interesting long-term opportunity, no question, but it is a long-term opportunity. And we don't think you should expect this to be like flipping a switch, but it is incremental to everything that you see across the firm currently. And we think we're really well positioned. We do think brand will matter.

To consider on behalf of their clients. So back to your question in terms of what this means for us, look, we think there's a real opportunity here. Uh, that's true for individual investors. That's also true for firms like ours. It's a massive Market. I think these statistics are broadly well known, but in the US, retirement is a 40 trillion Market was defined contribution being 12 billion or if not even north of that, it does make a lot of sense to us that Target date funds which have been taking 60% plus, of share, uh, of 401k flows if you will is where you'll probably see Alternatives first. So again, if you think of someone who's early in their retirement planning, it just makes sense to us that someone who's early in that Glide path. Uh, with that really long-term vision is where all can be most relevant.

Craig Larson: We think track records, investment expertise will matter. And we think depth and breadth of origination will matter. And these are all things that we think are truly differentiated aspects of KKR. And given all of that, again, just to be clear, we are dedicating the resources against this that you'd expect.

And so I think as we think about this opportunity we do look at it as a very interesting long-term opportunity. No, no question but it is a long-term opportunity and we don't think you should expect this to be like flipping a switch. Um but it is incremental to everything that you see across the firm currently and we think we're really well positioned. Uh we do think brand will matter. We think track records investment.

Scott Nuttall: Hey, John, it's Scott. Yeah, I think to your question, we don't know the quantum, and we don't know the timing. But I think Craig said it right. This is all incremental to everything that we've talked about and the longer-term vision that we've shared for the firm in the past. So we're trying to make sure we're well positioned as it plays out. Craig referenced it, but 60% of 401(k) flows go to target date funds. If you think of that format, it just makes sense for an individual investor because probably the allocation to alternatives and private markets should be different for somebody who's 30 versus someone who's 70. And so it's a nice format to be able to provide that flexibility. The target date market is very concentrated. The top five players have over 80% market share.

Expertise will matter. And we think depth and breadth of origination will matter. And these are all things that we think are truly differentiated aspects, uh, of Kerr and given all of that. Um, again just to be clear, we are dedicating the resources against this that you'd expect.

Hey John, it's Scott. Um

Yeah, I think to your question, we don't know the quantum.

And we don't know the timing.

Uh, but I think Craig said it right? This is all incremental.

To everything that we've talked about and the longer term Vision that we've shared for the firm in the past.

Um, so we're trying to make sure we're well positioned.

As it plays out.

Um, Craig referenced it but 60% of 401k flows. Go to Target date funds. If you think of that format, it just makes sense for an individual investor because probably the allocation to Alternatives or private markets. Should be different for somebody who's 30 versus someone who's 70.

And so it's a nice format to be able to uh, provide that flexibility.

Uh, the target date Mark Market is very concentrated.

Scott Nuttall: Our partners at Capital Group are one of those five players. So you can imagine we're having discussions as to what the future might look like together. But not a lot more color to share with you today, but we'll keep you posted over time as this plays out.

The top 5 players have over 80% market share.

Our partners at Capital group are 1 of those 5 players. So you can imagine we're having discussions as to what the future might look like together.

Uh, but not a lot more color to share with you today. We'll keep you posted over time as this plays out.

Operator: Our next question comes from a line of Michael Cypress with Morgan Stanley. Please proceed with your question.

Analyst: Hey, good morning. Thanks for taking the question. More of a bigger picture question for you guys on AI and blockchain, just as you look out over the next 5, 10 years. Curious how you see the industry evolving given potential changes here from AI to blockchain. Curious how you're adjusting your business model. What steps are you guys taking today and might take in the coming years, and what's this all mean for your business? Thank you.

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

Craig Larson: Yeah, Mike, it's Craig. Really interesting question. Again, not surprisingly, lots of activity around this across the globe, both as we're considering our portfolio as well as as we're considering new investments. So very early, but I think what we'd say at this stage, a couple of thoughts first. Our areas of focus are broad, certainly, and we're first focused on building smarter solutions in our companies. And I think that framework is one where we're looking to bring solutions that deliver more value to our customers. I think there's a second aspect, and that's helping our people at our portfolio companies be even more productive so they can do more, solve more, and have a better experience on the job. And then finally, in some cases, it's reimagining business models to unlock even bigger upside.

Hey, good morning. Thanks for taking the question, more of a bigger picture question for you guys on AI and blockchain. Just as you look at over the next 5, 10 years, curious, how you see the industry evolving given potential changes here from AI to blockchain curious, how you're adjusting your business model? What steps are you guys taking today and might take in the coming years and what's this all mean for your business? Thank you.

Yeah, Mike is Craig really interesting. Uh question again, not surprising.

Activity around this across the globe.

So very early uh but I think what we'd say at this stage uh a couple of thoughts first our areas of focus are broad certainly um and we're first focused on building smarter Solutions in our companies.

And I think that framework, is 1, where we're looking to bring solutions that deliver more value to our customers.

I think there's a second aspect, um, and that's helping our people at our portfolio companies, be even more productive.

So they can do more solve more and have a better experience on the job.

Craig Larson: And I think in addition to the portfolio companies and opportunities, again, like back to Glenn's question earlier on data centers. So this is increasing our opportunity set even at the same time. And so again, we've talked a lot about digital infrastructure on these calls and all the activity that you're seeing, but there's just some AI is creating a massive need for capital and solutions. And we want to make sure as we look to position ourselves strategically that we're bringing the right resources to bear for us across those opportunities. So it's our portfolio companies, it's new investments, it's areas like digital infra, and I'm sure there'll be more to come over time as it relates to other aspects. And I think you have seen other signs of this for us.

And then finally uh in some cases it's reimagining business models to unlock even bigger upside.

Craig Larson: Again, I'd point you back to, and Mike, I expect you'll remember this, but even back in '22, you know we partnered with a firm to offer a tokenized interest in our healthcare growth fund. So again, this was the first time that one of our strategies was offered in a digital blockchain format. So it was not a significant part of that fundraise, and I think these aspects are not material as we think of the go-forward fundraise for us, but do think it's a sign of the creativity that you're going to see in our firm as we look at evolving even the more traditional parts of our business model.

Um, and and I think, in addition to the portfolio companies and and opportunities, uh, again like back to Glenn's question earlier on data centers. So this this is increasing our opportunity set even at the same time. And so again, we've talked a lot about digital infrastructure on these calls and all the activity that you're seeing. But there's just some AI is creating a massive need, uh, for Capital and solutions. And we want to make sure as we look to position ourselves strategically that we're bringing the right resources to bear, um, for us those opportunities. So it, it's our, it's our portfolio companies. It's a new Investments, it's areas. Uh, like digital infra, um, and I'm sure there'll be more to come over time as it relates to other, uh, aspects. And I think, you know, you have seen other signs of of this for us again, I I'd point you back to

Scott Nuttall: Hey, Michael and Scott, appreciate the question. Look, it's early. You know we're still learning from our companies. We're spending a lot of time with young companies in the AI space and their founders and helping to connect dots between what they're building and how an alternative asset management firm actually functions. So when it comes to how we run KKR, which I think is part of the thrust of your question, we're still figuring that out, and we're connecting those dots. So far, it's clear it's going to help make our teams more productive. It'll help us scale the firm using technology in a way that we've never been able to before. But the specific answers to exactly what does that mean, that's what we're still working on.

And Mike, I expect you to remember this, but even back in 22, uh, you know, we partnered with a firm to offer a tokenized interest in our Healthcare growth fund. So, again, this was the first time that 1 of our strategies was offered in a digital blockchain format. So it was not a, a significant part of that fundraising. And I think these aspects are not Material as we think of the go for fundraiser for us but do think it's a sign of of the creativity uh that you're going to see in our firm. As we look at evolving, even the more traditional parts of our business model

And Michael and Scott, um, appreciate the question. Look, it's early.

You know, we're still learning from our companies.

We're spending a lot of time.

Um, with young companies in the AI space and their founders.

and helping to connect the dots between what they’re building and how.

an alternative asset management firm actually functions.

So when it comes to how we run KKR, which I think is part of the thrust of your question,

We're still figuring that out, um, and we're connecting those dots.

So far, it's clear. It's going to help make our teams more productive; it'll help us scale the firm using technology in a way that we've never been able to before.

Scott Nuttall: We'll keep you posted, but it's clear that there's meaningful opportunity, especially as we approach areas like private wealth, scale our insurance businesses to do some of this stuff in a different way operationally.

Um but the specific answers to exactly what does that mean? That's what we're still working on.

We'll keep you posted, but it's clear that the there's meaningful opportunity especially as we approach areas like private wealth.

Scale, our insurance businesses to do this some of this stuff in a different way. Operationally,

Operator: Our next question comes from a line of Bill Katz with TD Cowan. Please proceed with your question.

Analyst: Okay, thank you very much. Good morning, everybody. So just coming back, one of the pushbacks we get on KKR and the group at large is as the industry continues to scale, particularly in private credit, that the ability to drive differentiated returns goes down. We don't agree with that. We think scale will win. But that being said, I'm sort of curious if you could maybe update us on your origination platform. I know a couple of your peers do a pretty good job of delineating what their capacity is. I'd be curious maybe getting a little bit of a refresh of just the number of origination platforms you have and why you think that could translate into the ability to generate further alpha. Thank you.

our next question comes from line of Bill cats with TD Cowen. Please receive with your question.

Okay, thank you very much. Good morning, everybody. Um, so just coming back. I wanted to push back so we get on KKR and the group at large is as the industry continues to scale, particularly in private credit that the ability to drive. Uh differentiated returns goes down. Uh, we don't agree with that. Uh, we think scale will win but that being said, I'm sort of curious if you could maybe update us on your origination platform. I know a couple of your peers, do a pretty good job of delineating. What their capacity is I'd be curious to maybe get a little bit of a refresh of just number of origination platforms. You have and why you think that could translate into the ability to generate further Alpha? Thank you.

Craig Larson: Hey, Bill, it's Craig. Why don't I start? And then I'm sure Scott and Rob will chime in. Just in terms of the platform question, looking holistically across the firm, we have 35 platforms. That's both in asset-based finance as well as in real estate to help generate differentiated origination. And I think in terms of, in addition to the activity, you are going to have a whole bunch of different aspects for us to look to drive that origination flow. Do you think depth and breadth of origination is a really critical part to your point of generating attractive investment returns for us? I think as we look at our IG footprint today and look at that in total, that number for us is approaching $30 to $35 billion annually.

Mr. Craig what why don't I start? And then I'm sure Scott and Rob will chime in just in terms of the platform question, looking holistically across the firm, we have 35 platforms. That's both an asset base Finance as well as in real estate to help generate differentiated origination. And I think, in terms of in addition to that activity, you are going to have a whole bunch of of different aspects for us to, to look to drive that origination flow. Um, do you think depth and breadth?

Craig Larson: So again, and again, the largest piece of that is going to be in high-grade ABF, which wasn't the heart of your question as it relates to direct lending. But I think as we think of the framework broadly in the credit business, the connectivity that we have, and as direct lending is just becoming a much more mainstream part of how companies look to finance themselves, it just feels like the opportunity set is one that is continuing to increase and does feel very differentiated relative to even five-plus years ago.

Analyst: Hey, Bill, it's Scott. Maybe just.A

5 plus years ago.

Scott Nuttall: historical perspective, you know, private credit of the space is getting some of the same kind of noise that private equity got 20 plus years ago. Number of new entrants, can it scale? What does this mean? And to your point, what we and others have found, if you go up in size, you build different capabilities, you look at adjacencies, there's lots of different ways to continue to grow. In the grand scheme of the capital markets, it's fairly late, even in direct lending is pretty small. ABF, you know, five or six trillion on its way to seven to nine, much larger space. You know, the 7,500 people or so we have sourcing today across our platforms, 19 of them just in ABF. That number will continue to grow.

Hey Bill, it's Scott. Maybe just a...

Historical perspective. Uh, you know, private credit is a space is

Getting some of the same kind of noise that private Equity got 20 plus years ago.

Number of new entrance. Can it scale? What does this mean? And to your point, what we and others have found, if you go up in size, you build different capabilities.

Um, you look at adjacencies, there's lots of different ways to continue to grow in the grand scheme of the capital markets. It's really an 8 even in um,

Direct lending is pretty small.

Scott Nuttall: With the announcement this week, with HCR is another example of adding another platform and a team that's originating really private credit opportunity. So you'll continue to see us scale our ability to originate. And it has a bit of an echo to me of a lot of the things we've done in other asset classes across the firm, whether that be private equity or infrastructure or otherwise. So I'm with you on this. I think the sentiment's a bit overdone.

Um, ABF, you know, $5 or $6 trillion on its way to $7 to $9 trillion, a much larger space. You know, the 7,500 people or so we have sourcing today across our platforms—19 of them just in ADF. That number will continue to grow with the announcement this week.

With HCR, there's another example of adding another platform and a team that's originating really private credit opportunities. So you'll continue to see us.

scale our ability to originate and it has a bit of an echo to me of a lot of the things we've done in other asset classes across the firm, whether that be private Equity or infrastructure or otherwise,

So I'm with you on this, I think the sentiment is a bit overdone.

Operator: Our next question comes from a line of Patrick David with Autonomous. Please proceed with your question.

Our next question comes from the line of Patrick David with autonomous. Please receive with your question.

Craig Larson: Hey, good morning, everyone. To your prepared remarks, KKR obviously in a good position with its large high MOIC public position. But commentary from other execs and even the tangible data we see still suggests that strategics seem to be hesitant to buy sponsored-backed companies more broadly. So could you update us on your conversations with strategic buyers, where you think that bid ask is now? And what do you think needs to change to really open up that side of the realization equation? Thank you.

Hey, good morning, everyone.

Um to to your prepared remarks uh KKR obviously in a in a in a good position with this large High moic public position uh but commentary from other execs and and even the tangible data, we see still suggests that strategic seem to be hesitant to buy sponsored by companies more broadly. So could you update us on your conversations with strategic buyers where you think that bid ask is now what do you think needs to change, uh, to really open up that side of the realization equation? Thank you.

Scott Nuttall: Yeah, we read what you read, Patrick. That hasn't been our experience. We've been really active on the monetization front around the world, particularly in Asia this year. I know a lot gets talked about the IPO market, but we've been selling assets to strategic buyers. I think the bid ask that, you know, we were seeing, the spread that we were seeing, you know, 12, 24 months ago continues to dissipate. Or the public strategic, their stocks are up, so they have a more attractively priced currency and a lower cost of capital. And, you know, we're not experiencing what we're reading about, would be a simple way to say it.

Yeah, we read, uh, what you read, Patrick. That hasn't been our experience. We've been really active, uh,

on the monetization, front around the world, particularly in Asia this year,

Um, I know a lot gets talked about the IPO Market, um, but we've been selling access to strategic buyers. Um, I think the bid ask that, you know, we were seeing as the spread that we were seeing, you know, at 12:24 months ago, is continues to dissipate.

Or the public strategic, their stocks are up. So they have a more attractively priced currency in a lower cost of capital.

Uh, and you know, we're um we're not experiencing what we're reading about. Would be a simple way to

Operator: Our next question comes from a line of Brian Bedell with Deutsche Bank. Please proceed with your question.

Craig Larson: Great, thanks. Thanks. Good morning. Thanks for taking my questions. Just a two-parter, if I may. One on the investment management fees in both private equity and real assets. They were ahead of our estimates, and I think ahead of consensus. And I know that the Fund 14 turned on. Just trying to get a sense of, is there anything else unusual in terms of like catch-up fees or anything else? And I think there's maybe some step-down dynamics that might go into third quarter. So any kind of color you could give on that? And then the second question is just, you know, good capital markets momentum and obviously the environment, you know, it seemed seemingly good into the second half.

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

Craig Larson: So I just wanted to get your view on whether you think the capital markets fees can be, you know, even stronger in the second half than they were in the first half.

Great, thanks. Thanks. Good morning. Thanks for taking my questions. Um, since you partner, if I met 1 on the, uh, Investment Management fees in in both private equity and real assets, they uh, we're ahead of our estimates. I think I had a consensus, I know that the fund 14 turned on, um, just trying to get a sense of is, uh, is there anything else unusual in terms of like catch up fees or anything else? Um, and I think there's maybe, maybe, maybe some step down Dynamics, um, that might go into third quarter. So any kind of color you could give on that. And then the second question is just, you know, get Capital markets momentum and um, obviously the environment um, you know, uh, is, is it seems seemingly good until the second half. So just wanted to get your your view on um on whether you think the capital markets fees can be, you know, even stronger in the second half than they were in the first half.

Scott Nuttall: Right. Thanks a lot for the question. So on investment management fees, nothing out of the ordinary, other than to your point, we were turning on some larger funds. If you look in the quarter, we probably benefited around 30 million from the turn on of NAX4 in Q2. We did have a bit of catch-up fees in our real assets business, but again, nothing really out of the ordinary across the platform. I think it's just solid organic growth across our platform. And feel good about our trajectory on management fees, both on an absolute basis and relative to our industry. As it relates to capital markets, I think another solid quarter, you know, roughly 200 million of fees. I think we're 430 million on a year-to-date basis. We see some strength absolutely on the industry-wide side as we look at Q3 and the pipeline.

Right. Uh, thanks a lot for the question. Um, so on investment management fees, nothing out of the ordinary, um, other than, uh, to your point, we were turning on some larger funds.

Scott Nuttall: We're only a month in, but feel good that we'll be, you know, plus or minus in line with where we were in Q2. Obviously, some upside if the capital markets stay healthy over the course of the rest of the quarter. And it's probably a little bit premature at this stage to have a view with any precision on Q4. But pipelines are building. I think much more importantly, as we look at our capital markets business, you know, we're able to hire the right talent. I think we've got the business model fully in place. And if the capital markets really do continue to stay strong and healthy and stable, you know, we feel really good about growing our franchise heading into 2026. Hey.

Robert Lewin: Brian and Scott, I mean, one of the things we reflect on is I think the sentiment around our space is dramatically more volatile than the reality. You know, if you think about April and May and the commentary over that period of time, and you kind of would have guessed what Q2 would have looked like in terms of activity. You know, we raised $28 billion. We invested $18 billion. You heard the financial metrics in terms of fee-related earnings up over 30% the last 12 months, ANI 27%. You know, uncertainty creates volatility, creates opportunity for us in the investing side. But as we've shared, 70 to 80% and more recently, 80% of our pre-tax income is coming from activities that we think are highly repeatable and durable and can grow. And so I think you have that come through in the quarter.

Source of the rest of the quarter. Um, and it's probably a little bit premature at this stage to have a view with any precision on Q4. However, pipelines are building. I think, much more importantly, as we look at our Capital Markets business, you know, we're able to hire the right talent. I think we've got the business model fully in place, and if the capital markets really do continue to stay strong, healthy, and stable, you know, we feel really good about growing our franchise heading into 2026.

Hey Brian. It's Scott. I mean 1 of the things we reflect on is I think the sentiment around our space

is dramatically more volatile.

Than the reality.

Um, you know, if you think about April and May and the commentary

Over that period of time.

And you kind of would have guessed what Q2 would have looked like in terms of activity?

Um, you know, we raised 28 billion dollars, we invested 18 billion dollars. You heard the financial metrics

In terms of fee-related earnings, we are up over 30% in the last 12 months.

27%.

Um, you know, uncertainty creates, solid volatility, creates opportunity for us in the investing side.

but as we've shared 70 to 80% and more recently, 80% of our pre-tax income,

Is coming from, uh, activities that we think are highly repeatable.

Robert Lewin: And so anyway, that's the broader takeaway from our standpoint is the commentary makes it sound like the business is very difficult. The results and our day-to-day experience speaks otherwise.

And durable and can grow. And so, I think you had that come through in the quarter.

And so anyway, that's the broader takeaway from our standpoint, is the commentary.

Makes it sound like the business is very difficult.

The results and our data experience speaks. Otherwise,

Operator: Our next question comes from a line of Arnaud Giblard with BNP Paribas. Please proceed with your question.

Our next question comes from the line of Arnold gibot with BMP baraba, please see with your question.

Operator: Yeah, good morning. Thank you for taking my question. I'd like to come back to the KKR ECP joint venture and just follow up on that question. So I was hoping to get a bit more kind of around the 50 billion JV there in terms of how this money gets deployed. I mean, part of it is going to go through existing funds, if I understood well, and the rest are probably through SMAs and Co-Invest. I'm just wondering if you could give us a bit of color around that. Also, I mean, clearly there's ECP in that joint venture. So what's how should we think about the split of that 50 billion between you and your partner? And in terms of timing, how long should we be looking for the deployment of those $50 billion? Thank you.

Uh, yeah, good morning. Um, thank you for taking my question. I'd like to come back to um, the uh,

The ECP joint venture, and just to follow up on that question, I was hoping to get a bit more kind of clarity around the $50 billion JV there in terms of...

How how this money gets deployed? I mean, part of it is going to go through existed fee, existing funds if I understood well, and, uh, the rest are probably through, uh, smas. And, uh, so and co-invest, I'm just wondering if, if we, if you could give us a bit of of color around that also, I mean, clearly there's ECP in in that joint venture. So, what's how, how should we think about the split of that 50 billion in between you and your partner? And uh, in terms of timing I

What, how long um, should we we be looking for the deployment of those billion dollars. Thank you.

Analyst: Thanks for the question, this is Craig. Why don't I start? So in late '24, we formed a partnership with Energy Capital Partners that effectively combines our respective capabilities and capital across digital and energy infrastructure. And really, again, if you think about the surge in AI demand and what that requires, I think we all have a clear sense of this, that it is stretching infrastructure, but it's doing more than that. It's changing the blueprint for how these projects need to be built. And so if you look at the announcement we made last night, that again is really a direct reflection of the reality.

We forward a partnership with energy Capital partners.

That effectively combines our respective capabilities and capital across digital and energy infrastructure.

And really, again if you think about the surge in AI demand and what that requires, I think we all have a clear sense of this. That that it is. It's stretching infrastructure but it's doing more than that. It's it's

Analyst: And so what we formed with ECP is the ability for us to approach hyperscalers and make their lives easy and be a one-stop shop and provide creative, thoughtful solutions from the construction side, from the real estate side, from the energy solution side. And it's really, that's how we're going to differentiate ourselves. So I think a lot of these firms, again, are incredibly cash-generative firms with a lot of capital. And I think if you're only showing up with capital, that's not going to be a differentiator. So again, how do we look to be a really value-added partner? And so this was our approach. And I think the transaction you saw last night is a direct reflection of that. Would think of that overall partnership as being 50-50 between the two of us.

Changing the blueprint for how these projects need to be built. And so, if you look at the announcement we made last night, uh, that again is, is, is really a direct reflection of the reality. And so, what we formed with with ECP is the ability for us to approach hyperscalers, and make their lives easy and be a 1-stop shop and pride of, and provide creative thoughtful solutions from the construction side from the real estate side from the Energy Solution side. And it's really, that's how we're going to differentiate ourselves. So I think a lot of these firms again are incredibly, uh, uh, uh, incredibly cash generative firms with a lot of capital. And I think if you're only showing up with capital, let's not going to be a differentiator. So again, how do we look to be a really value added partner? And so this was our approach and I think the transaction you saw last night is a direct reflection of that would think of that. That

Analyst: Yes, would expect over time that capital from us to come from our existing funds and strategies. And again, there's no timing or specific threshold through which we need to invest that capital, et cetera, in partnership with ECP. But I think, again, really powerful outcome as you would have seen last night.

Robert Lewin: Yeah, the only thing I'd add on that is that as we find more projects in addition to using our existing funds and SMAs, as you point out, there's definitely an ability to raise capital, incremental capital, to further fund the activity.

Overall partnership is being 50/50 between the 2 of us. Yes, would expect over time, uh, that capital from us to to come from our existing funds and strategies. Um, and again there's no uh, timing or or or specific threshold through which uh, that we're we need to invest that Capital Etc in partnership with ECP, but I think again really powerful outcome, as you would have seen last night.

Yeah, the only thing I'd add I know is that uh as we find more projects in addition to using our existing funds in smas, as you point out, there's definitely an ability to raise Capital incremental Capital the further fund the activity.

Operator: Our next question comes from a line of Brian McKenna with Citizens JMP. Please proceed with your question.

Scott Nuttall: Great. Thanks for squeezing me in and appreciate all the detail this morning. I just had a quick question on the trajectory of earnings over the next 12 to 18 months. So you're on track to generate about $5 of adjusted EPS in 2025. That implies about 40% earnings growth in '26 to get to the low end of your target. So can you just help us bridge the gap here and what some of the bigger drivers will be for this earnings growth over the next four to six quarters?

Comes from the line of Brian McKenna with citizens. JMP, please proceed with your question.

Scott Nuttall: Brian, thanks a lot for the question. Maybe just to unpack a bit of the P&L, you're seeing obviously a lot of momentum on the management fee line item. A lot of ways I think this speaks maybe best to the financial health of our firm and where we're going. We feel like we got a lot of momentum in our capital markets franchise, especially as the capital markets continue to open up, feel really well positioned to be able to grow. You're starting to see some fee-related performance revenue now flow into our P&L, which we think can scale really nicely. We've talked about a lot of the things that we're doing across the insurance space, including a much more meaningful contribution of third-party capital.

Great. Thanks for squeezing me in and appreciate all the detail this morning. I just had a quick question on the trajectory of earnings over the next 12 to 18 months. So you're on track to generate about 5 dollars of adjusted EPS in 2025 that implies about 40% earnings growth in 26 to get to the low end of your target. So can you just help us bridge the gap here and what some of the the bigger drivers will be for this earnings growth over the next 4 to 6 quarters

Yep, Brian. Thanks a lot for the question. Maybe just to unpack a bit of the P&L you're seeing. Um, obviously a lot of momentum on the management fee line item; a lot of ways I think this speaks, um, maybe best to the financial health.

Uh, of our firm and where we're going.

Uh, we feel like we got a lot of momentum in our Capital markets franchise special.

Scott Nuttall: And then one of the things that's really important to think about over the next 12 to 18 months as we look at how our earnings can scale. Today, we have roughly 17.1 billion of embedded gains that sit on our balance sheet. That's a record high for us. So that's an aggregation of our gross on realized carried interest, as well as the differential between the fair value and the costs of both our asset management investment portfolio and what sits in strategic holdings. So when you add all those things together and we look forward, not just in '26, but importantly over the long term, you know, we feel like we're in a really good position to be able to scale the firm and its earning trajectory.

This is the capital markets continue to open up. Feel really well positioned to be able to grow. You're starting to see some fee related performance, Revenue now flow into our p&l, uh, which we think can scale really nicely. Uh, we've talked about a lot of the things that we're doing across the insurance space including um a much more meaningful contribution of third-party capital. And then 1 of the things that's really important to think about um over the next 12 to 18 months as we look at how our earnings can scale. Uh today we have roughly 17.1 billion of embedded gains that sit on our balance sheet,

That's a record high for us. So, that's an aggregation of our gross unrealized carried interest.

As well as the differential between the fair value and the costs.

of both our asset management Investment Portfolio and what sits in strategic Holdings,

Scott Nuttall: In addition to that, what we're doing in strategic holdings, we think will further benefit the overall growth of our platform is just this new segment that today is still not generating a lot of operating earnings. But as you look at 2026, as a management team, you know, we look at that portfolio, we look at our 350 million of operating earnings guidance for next year, and we feel really good in our ability to beat that. So those are a bunch of the pieces to the puzzle as we look over the course of the next 12 months. But importantly, you know, as a management team, we're looking long-term as well.

So when you add all those things together, and we look forward not just in 2026, but importantly, over the long term, you know, we feel like we're in a really good position to be able to scale the firm and its earnings trajectory. In addition to that, what we're doing in strategic holdings, we think will further benefit the overall growth of our platform. This new segment, which today is still not generating a lot of operating earnings, but as you look at 2026, we believe it will contribute positively.

Scott Nuttall: And so we not only feel good about what we're going to be able to achieve in '26, but also feel like we're really very much on track for some of our longer-term goals, which, as you know, is to grow to $15 plus dollars per share of earnings. And think that we've got the business model to be able to do that without creating anything new. And we do see some new things on the horizon that we think we can add to our platform.

As a management team, you know, we look at that portfolio, we look at our 350 million of operating earnings guidance, for for next year, and we feel really good in our ability to beat that. Uh, so those are a bunch of, um, the pieces to the puzzle as we look, uh, over the course of the next 12 months. But importantly, you know, as management team we're looking long term, um, as well. And so we not only feel good about what we're going to be able to achieve in 26, but also feel like we're really very much on track. Uh, for some of our longer term, um, goals, uh, which as you know, is, is to grow to 15 plus dollars per share of earnings. Uh, and think that we've got the business model to be able to do that without creating anything new. Uh, and we do see some new things on the horizon that we we think we can.

To our platform.

Operator: Our next question comes from a line of Kyle Voit with KBW. Please proceed with your question.

Our next question comes from the line of Kyle Voight with KBW. Please proceed with your question.

Craig Larson: Hi, good morning. So Rob, you just mentioned management fee growth as a kind of key part of the algorithm to how to get to your targets for 2026. I'm just wondering if I can get some clarity on 2025. I know you previously outlined that you could see a bit of an acceleration in '25 versus the 14% realized in 2024. I think you posted 15% in the first half of the year, but that accelerates to 18% in 2Q with NA14 turning on. So just wondering if we can get an update on how to think about second half management fee growth. Is that 18% year-on-year growth rate the right jumping-off point for the second half of the year? And then any other notable activations or final closes to call out for 2H? I know Infra5 is still in the market.

Craig Larson: So anything to call out there from a timing perspective?

Scott Nuttall: Yeah, thanks a lot for the question, Kyle. When we continue to raise capital across the platform, you know, I think it's worth noting as you look at that 18% growth rate we had in the quarter, talked about 30 million having come from NAX4. So our largest product only contributed $30 million of growth in the quarter. Fairly immaterial number as you think about, you know, our roughly a billion dollars in management fee in the quarter. So I don't have any specificity for you around the back half of the year on management fee other than to say, you know, we feel good about the capital-raising momentum we have across all of KKR, not just in our big flagship products. And our expectation is that we'll continue to post solid results as we go through the end of the year.

Hey, good morning. Um, so Rob, you just mentioned management fee growth as a kind of key part of the algorithm to how to get to your targets for 2026. I'm just wondering if I can get some clarity on 2025. I know you previously. Outlined that you could see a bit of an acceleration in 25 versus the 14% realized in 2024. I think you posted 15% in the first half of the year but that accelerates 18% in 2q, uh, with na1 14 turning on. So, just wondering if we can get update on how to think about second half management fee growth, is that 18% year-on-year growth rate the right um jumping off point for the second half of the year and then any other notable activations or final closest to call out for 2 H? I know in for 5 is still in the market so anything to call out there from a timing perspective.

Yeah. Um, thanks a lot for the question Kyle. And we continue to, uh, raise Capital across the platform. Um, you know, I think it's it's worth noting as you look at that, 18% growth rate we had in the quarter talked about uh, 30 million having come from Next 4. So our largest product only contribute, 30 million dollars of growth in the quarter fairly immaterial number, as you think about, you know our roughly a billion dollars of management fee in the quarter. So I don't have any specificity uh for you around the back half of the Year management fee other than to say

Craig Larson: And Kyle, as Craig, just one thing, you know, Rob at our firm meeting had mentioned a statistic earlier that I thought was interesting. Like, I think the breadth and diversification in our fundraising is just worth highlighting. So over the trailing 12 months, we've raised $110 billion. If you look at that, that's 50 in credit, 30 in private equity, 30 in real assets. And we've noted historically on some of these calls, in turn, the diversification you're seeing in management fees. So on, again, on a trailing 12-month basis, management fees are between $1.1 billion and $1.4 billion across each of our three businesses. So I think when you think of the breadth and diversification we have across strategies, across geographies, again, it just feels like we've got a number of ways to win.

You know, we feel good about the capital raising momentum. We have across all of KKR, not just in our big Flagship products, uh, and our expectation is that we'll continue to post solid results as we go through the end of the year.

And Kyle is Craig, just 1 thing. You know, Rob at our firm meeting had mentioned a statistics that earlier that I thought was interesting, like I I think the breadth and diversification in our in our fundraising is just worth highlighting.

We'd raised 110 billion dollars. If you look at that, that's 50 in credit, 30 in private Equity 30 in real assets.

And we've noted historically on some of these calls in turn the diversification, you're seeing in management fees.

So on again, on a trailing 12-month basis management fees are between 1.1 billion and 1.4 billion across each of our 3 businesses. So I think when you think of the breadth and diversification we have across strategies across geographies, again, it just feels like we've got uh, we've got a number of ways to win.

Operator: Thank you. We have no further questions at this time. Mr. Larson, I'd like to turn the floor back over to you for closing comments.

Craig Larson: Elizabeth, just thank you for your help this morning and everybody who joined. Thank you for your interest in KKR. We look forward to following up further with those of you who have more specific questions. And otherwise, we'll be back chatting with everybody in 90 days. Thank you so much.

Thank you. We have no further questions at this time. Mr. Larson, I'd like to turn the black floor back over to you for closing comments.

Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Elizabeth just uh thank you for your help this morning and everybody uh who joined, thank you for your interest in kicker. Um we look forward to following up further with those of you have more specific questions and otherwise we'll be back uh, chatting with everybody in 90 days. Thank you so much.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.