KKR Fixed Income (KFI) was co-founded by Kohlberg Kravis Roberts & Co. (KKR), Saturnino Fanlo, and David Netjes in July 2004, marking KKR’s entry into the credit business. The establishment of KFI was an early step in KKR’s evolution as a leading, global alternative asset management company. KFI is a corporate debt investment manager — combining KKR’s deep insight and relationships, resources, and competitive advantages with KFI’s knowledge, experience, and core competencies in the areas of corporate credit and structured finance.

Through KFI, KKR is building a premier fixed income-investing platform that delivers products and returns to satisfy a broad range of investment mandates. KFI has considerable experience in this area, having assembled a team of over 70 professionals over the course of its four-year existence — while other private equity firms are just recently expanding into the fixed income business. KFI has a fully dedicated team of professionals focused solely on the credit markets regardless of the economic environment and context. This team is complemented by KKR’s private equity professionals and operational groups. Leveraging the experience and creativity of KFI’s combined resources, KFI is able to offer innovative programs tailored to certain investment criteria enabling investors to take advantage of KKR’s market expertise, depending on an investor’s targeted return and risk tolerance.

KFI currently manages two debt investment vehicles and a number of related collateralized loan obligation (“CLO”) structures). The CLO structures are an important source of financing for our investments.

KKR Financial Holdings LLC (NYSE:KFN) — is a publicly traded specialty finance company that focuses on making investments that build long-term value and generate competitive risk-adjusted returns using moderate leverage. KFN's core business strategy focuses on investing in corporate debt, including senior secured loans, mezzanine loans, and high yield securities with a particular emphasis on debt issued by large capitalization firms with broad geographic and product offerings. As of June 30, 2008, KFN had $2 billion of capital under management.

Strategic Capital Fund (SCF) — is a private credit hedge fund that invests primarily in corporate credit transactions across the capital structure. SCF uses leverage to generate attractive risk-adjusted returns. While its investment mandate is similar to KFN, SCF’s investment portfolio is more concentrated and is less weighted in the senior part of the capital structure. SCF had assets under management of approximately $1.1 billion as of June 30, 2008.

In addition, KFI also manages separate accounts with committed capital of $3.5 billion as of September 30, 2008. A managed account allows an investor of size to tailor a portfolio that best meets its investment criteria (e.g., return target, asset mix, leverage, re-investment, industry exposure, geography).

 

 

 

“The fixed income business should be a growth engine for us going forward. We believe there is a significant opportunity to leverage our intellectual capital and longstanding relationships with our private equity investor base and other investors to drive this business over the next several quarters.”

Henry R. Kravis
Co-Founding Member, KKR