(Bloomberg) — KKR & Co.’s business of arranging financing for its portfolio companies and other firms reported record annual fees last year, driven by growth in structured-credit transactions.
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The capital markets unit, led by Adam Smith, booked $1 billion of fees for 2024, up from $577.6 million a year earlier, the alternative asset manager said in a statement Tuesday, when it reported fourth-quarter results.
That includes $131 million of loans originated for companies not owned by KKR and $139 million for structured-capital transactions, which include financing backed by assets, according to a person with knowledge of the matter.
“It’s part of a broader trend we’re seeing where institutional capital is increasingly flowing into the private investment-grade markets and creating new ways to finance deals that were traditionally financed on bank balance sheets,” Smith said in an interview.
The firm launched its capital markets unit in 2006, making it one of the earliest movers among nonbanks to compete with Wall Street lenders to arrange equity and debt financing. The unit has generated about $6 billion in fees for KKR since it was started.
Alternative asset managers such as KKR are increasingly making loans to companies as banks have reined in lending amid expectations of stricter capital requirements. In the past year, KKR has hired people specializing in asset-based lending to grow that segment of the business.
Since acquiring the remaining portion of insurer Global Atlantic it didn’t already own, KKR has leveraged its insurance business to support transactions originated by the capital markets business. Global Atlantic invests in some of the deals structured by capital markets, which are also syndicated to other insurers, asset managers and pensions.
Transactions that drove the 2024 record include arranging a credit facility for CyrusOne, its data center company, and advising on the initial public offering of cold-storage warehouse firm Lineage, last year’s largest IPO.
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