KKR at Morgan Stanley Conference: Growth Amid Market Volatility

At the Morgan Stanley US Financials, Payments & CRE Conference 2025, KKR highlighted its capital markets platform, which generated $1 billion in fees last year and $2 trillion since inception, as a key driver of growth despite market volatility. Adam Smith, Partner and Co-Head of KKR’s Credit Business and Capital Markets Business, emphasized the firm's diversified revenue streams, expansion into Asia to tap into a bank-driven market, and integration with Global Atlantic to unlock new revenue opportunities. KKR sees significant growth potential in private investment grade and asset-based financing, and anticipates a resurgence in M&A activity given the $7 trillion in cash on the sidelines.

Analysis

KKR & Co. highlighted a strong growth trajectory and resilient performance for its capital markets business at the Morgan Stanley US Financials, Payments & CRE Conference. The platform generated $1 billion in fees in the last year, contributing to $2 trillion in financings since inception and over $400 billion in debt and equity financings in the past year alone. Average annual revenues for the capital markets platform exceeded $700 million between 2020 and 2024, showcasing consistent growth. This performance is underpinned by diversified revenue streams, including a significant "party business" (services to non-KKR owned companies) that has yielded over $1 billion since inception, and a strategic shift towards more granular transactions, which demonstrated resilience with approximately $600 million in annual revenue during the dislocated markets of 2022-2023. KKR is actively pursuing expansion into high-potential areas such as private investment grade, asset-based financing, and structured capital markets, with the integration of Global Atlantic being pivotal in unlocking new revenue streams through access to insurance capital, as demonstrated by transactions like the CyrusOne financing. The firm aims to double its capital markets business, driven by the growth of KKR's overall assets under management (AUM), expansion of its "party business", operational leverage from its lean 70-employee team, and strategic initiatives in Asia to capitalize on bank-dominated markets requiring institutional capital. KKR also expressed optimism for a resurgence in M&A activity, citing $7 trillion in cash on the sidelines, which could further fuel its deal flow and fee generation.

Key Decisions for Investors

• Investors should evaluate KKR's capital markets segment as a significant and growing contributor to fee-related earnings, particularly given its stated ambition to double this business and its strong historical performance.
• Monitor KKR's execution in expanding its private investment grade and asset-based financing offerings, as these are identified as key future growth pillars alongside the anticipated resurgence in M&A activity.
• Assess the ongoing synergistic benefits derived from the Global Atlantic integration, particularly its capacity to facilitate innovative structured finance solutions and enhance capital deployment in new asset classes.
• Consider the resilience demonstrated by KKR's capital markets business during market volatility and its diversified, efficient operational model when evaluating the firm's overall risk-return profile and its ability to navigate varied economic conditions.