Oct 11 (Businesshala) – KKR & Co Inc said on Monday it has promoted its co-chairs Scott Nuttall and Joseph Bay to co-chief executive officers, succeeding Henry Kravis, the billionaire co-founder of the private equity firm. and is replacing George Roberts.
The change has been in the works for years and is unlikely to surprise the firm’s investors. KKR had named BAE (49) and Nuttall (48) as co-chairs in 2017. KKR on Monday said Kravis, 77, and Roberts, 78, would continue to run the firm as executive co-chairs.
KKR said the value of KKR’s shares has tripled and its assets under management and distributable earnings have doubled since BAE and Nuttall officially became top lieutenants of Kravis and Roberts four years ago.
Still, Nuttall and Bea face a high-stakes challenge in replicating the successful working relationship of Kravis and Roberts, two cousins who started KKR 45 years ago. From keeping his name as part of the KKR acronym to maintaining a close-knit culture of old-school Wall Street loyalty, he maintained a tight grip on the firm and helped shape the leveraged buyout industry.
The move leaves Stephen Schwarzman, 74, CEO of Blackstone Group Inc., as the only founder of a major publicly listed private equity firm who has not relinquished the role of chief executive, although his No. Officer Jonathan Gray has been in line for years to succeed him.
In 2018, Carlyle Group Inc. CEO Kavesong Lee took over from co-founders David Rubenstein, William Conway and Daniel D’Aniello, and Ares Management Corp. CEO Michael Arogetti replaced co-founder Tony Ressler. Mark Rowan, co-founder of Apollo Global Management Inc., became CEO in March, replacing Leon Black, who stepped down in the wake of an investigation into his ties to the late financier and convicted sex offender Jeffrey Epstein.
Nuttall and BAE both joined KKR in 1996. Nuttall previously spent less than two years at Blackstone, while Bae spent a similarly short stint at Goldman Sachs Group Inc.’s flagship investment group.
Nuttall helped take KKR public, a process that involved merging the firm with an Amsterdam-listed fund in 2009 and then moving the listing to New York in 2010. He has been a constant on the firm’s quarterly earnings calls with Wall Street analysts and also ran. KKR’s capital markets, insurance, credit, hedge funds and fundraising initiatives.
BAE has been the main driver of KKR’s expansion in Asia, making the firm one of the largest US private equity investors on the continent. The Korean-American dealmaker also sat on the investment committees of KKR’s global private equity business.
By attracting money from some of the world’s largest institutional investors such as pension plans and sovereign wealth funds, KKR grew from a single fund of $30 million in 1978 to over $429 billion in assets currently under management. These assets extend to private equity, real estate, corporate credit and hedge funds.
KKR first gained wide recognition in 1988 through its $25 billion leveraged buyout of RJR Nabisco, a fight that was immortalized in the bestseller “The Barbarian at the Gate”. Its current investments include ride-sharing start-up Lyft Inc, beauty product maker Wella AG and media conglomerate Axel Springer SE.
According to Forbes, Kravis and Roberts have an estimated net worth of $8.6 billion and $9.1 billion respectively.
Apart from its change of leadership, KKR on Monday said it will take steps to do away with its dual-class equity structure. Carlyle was the first publicly listed private equity firm to do so in 2019, followed by Apollo this year.
KKR said its common shareholders will be able to vote face-to-face on all important issues, including the election of the board of directors. It said this would be achieved, though a complex web of mergers of KKR entities would be completed by 2026.