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Henry Kravis and George Roberts, whose sword-effect buyouts in the 1980s made them the face of the private equity industry, are stepping down as co-CEOs of KKR, the eponymous company that they founded in 1976.
Long-time company co-chairs Scott Nuttall and Joe Bae will jointly take the helm, KKR announced Monday. Kravis and Roberts will remain executive chairmen of the board and maintain investor relations and provide advice on company strategy.
KKR’s big rivals including the Carlyle Group, Apollo Global Management and TPG have seen their longtime founders pass the torch to a younger generation in recent years as the $ 4 billion private equity industry matures and surpasses debt-fueled business acquisitions.
“We couldn’t be more excited about this moment in time,” Kravis, 77, and Roberts, 78, said in a joint statement. “There is a huge need for private capital to support businesses, and KKR still has so much potential, even 45 years later. “
Kravis and Roberts, cousins who studied together at Claremont Men’s College in the late 1960s, then worked together at Bear Stearns investment bank before leaving with their mentor, Jerome Kohlberg, to form Kohlberg, Kravis, Roberts & Co.
The company took off the following decade with the advent of the junk bond market, acquiring well-known names like Safeway and Duracell. But KKR’s $ 25 billion conquest of RJR Nabisco in 1989, immortalized in the book Barbarians at the door, would come to symbolize a new kind of scorched earth finance that created billionaires but left carnage among failed businesses and communities. Kohlberg left KKR in 1987 and died in 2015.
Kravis and Roberts have remained intimately involved with the business despite its size. KKR has nearly 2,000 employees and manages $ 429 billion in assets across private equity, real estate, insurance and credit investment. Roberts has maintained his base in San Francisco while Kravis in New York has been one of the most visible members of that city’s business community.
This year, KKR completed the $ 5 billion acquisition of Global Atlantic, a life insurance company, which extends its reach to fixed income investments and business loans. KKR was listed on the New York Stock Exchange in 2010; its shares have risen 130% since the start of 2020, giving it a market cap of over $ 60 billion.
As KKR and its peers came to manage hundreds of billions of dollars and shifted from island partnerships to large publicly traded companies, they had to carefully balance the control impulses of their founders with the need to attract public market investors and peacefully exist in the public glow. KKR has reorganized as a corporation, paying a higher tax rate, while announcing its intention to have a one-share, one-vote structure.
Nuttall, 48, and Bae, 49, each joined KKR in 1996 in their 20s. Bae had built KKR’s Asian business while Nuttall focused on the company’s capital markets and credit business.
Kravis and Roberts are the two largest shareholders of KKR, which has enabled them to each pay out $ 90 million in dividends in 2020.
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